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Willis Towers Watson (WLTW) Q2 Earnings: Is a Beat in Store?

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We expect Willis Towers Watson plc (WLTW - Free Report) to beat estimates, when it reports second-quarter 2017 results on Aug 3, before the market opens.

Why a Likely Positive Surprise?

Our proven model shows that Willis Towers Watson has the right combination of two key ingredients to beat estimates.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.68%. This is because the Most Accurate estimate of $1.49 is pegged slightly higher than the Zacks Consensus Estimate of $1.48 per share. The positive ESP is a leading indicator of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Willis Towers Watson carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. Plus, the company’s positive ESP also makes us confident about an earnings surprise. We relied on the Zacks methodology, which considers a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP, to predict chances of a beat.

Conversely, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.

What is Driving the Better-Than-Expected Earnings?

Willis Towers Watson’s top line has likely improved on the back of an increase in commissions and fees plus investment income.

Results have possibly benefited from an increased membership at the exchange.

While organic growth and strategic acquisitions are expected to have driven higher commissions and fees, a gradual improvement in interest rate environment has backed the net investment income.

Margins are estimates to have benefited from cost synergies stemming from the merger.  However, restructuring costs due to its Operational Improvement Program and integration expenses expected to have weighed on desired margin expansion.

Share buybacks should provide additional upside to the bottom line.

With respect to the earnings trend, the company delivered positive surprises in the last four quarters, with an average beat of 8.39%.

Willis Towers Watson Public Limited Company Price and EPS Surprise

Other Stocks to Consider

Some other stocks worth considering in the finance sector with the right combination of elements to come up with an earnings beat this quarter are:

National General Holdings Corp (NGHC - Free Report) is set to report second-quarter earnings on Aug 7. The stock has an Earnings ESP of +2.56% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here..

Cigna Corporation (CI - Free Report) is set to report second-quarter earnings on Aug 4. The stock has an Earnings ESP of +1.61% and a Zacks Rank #2.

Manulife Financial Corporation (MFC - Free Report) has an Earnings ESP of +7.32% and a Zacks Rank #2. The company is set to report second-quarter earnings on Aug 7.

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