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What's in Store for Aon (AON) Stock This Earnings Season?

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Aon plc AON is set to report fourth-quarter 2019 results on Jan 31, before the opening bell.

The Zacks Consensus Estimate for the bottom line stands at $2.49, implying a 15.3% increase from the prior-year reported figure. For the to-be-reported quarter, the consensus mark for fourth-quarter revenues is pegged at nearly $2.9 billion, suggesting 3.3% improvement from the year-ago reported figure.

Factors Likely to Impact Q4 Results

Aon is likely to have seen an uptick across all its segments, namely Commercial Risk Solutions, Data & Analytics, Health Solutions and Reinsurance Solutions segments, leading to solid revenues.

The Zacks Consensus Estimate for fourth-quarter revenues from the company’s Commercial Risk Solutions and Data & Analytics indicates 3% and 4.8% growth, respectively, from the year-earlier reported numbers.

Notably, the consensus mark for revenues from Health Solutions and Reinsurance Solutions suggests a rise of 3.8% and 4.3% each from the year-earlier reported numbers.

The Commercial Risks Solutions segment is likely to have witnessed an upside on the back of strong organic revenue growth across major geographies. The Reinsurance Solutions segment is likely to have grown in the fourth quarter, primarily driven by new business generation.

Notably, its Health Solutions segment might have benefited from organic growth in the period.

However, the consensus estimate for revenues from the Retirement Solutions segment implies a 1% dip from the year-ago reported figure. This downside might have been due to the divestiture of certain businesses in the segment.

Per the last earnings call, the company expected an unfavorable impact of 4 cents per share or $12 million reduction in fourth-quarter operating income (assuming currency to remain stable).

Despite challenges from adverse forex fluctuation, the company is likely to have witnessed a favorable operational margin.

Aon is also likely to have enjoyed free cash flow in the to-be-reported quarter, mainly on the back of its solid operational performance.

However, the company might have incurred high costs in the quarter to be reported induced by heavy investments.

What the Quantitative Model States

Our proven model does not conclusively predict an earnings beat for Aon for the quarter to be reported. The right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise, which is not the case here.

Earnings ESP: Aon has an Earnings ESP of 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $2.49. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Aon plc Price and EPS Surprise

Aon plc Price and EPS Surprise

Aon plc price-eps-surprise | Aon plc Quote

Zacks Rank: Aon currently carries a Zacks Rank #2, which increases the predictive power of ESP. However, the company’s 0.00% ESP in the combination makes surprise prediction difficult for the stock this time around.

Highlights of Q3 Earnings and Surprise History

In the last reported quarter, the company delivered operating earnings of $1.45 per share, beating the Zacks Consensus Estimate of $1.43 by 1.4% and also growing 10.7% year over year on higher revenues.

The insurance broker flaunts an impressive surprise history, having delivered a positive surprise in all the trailing four quarters, the average being 0.57%.

Stocks to Consider

Some stocks worth considering from the finance sector with the perfect mix of elements to surpass estimates in the upcoming releases are as follows:

American International Group, Inc. AIG is set to report fourth-quarter earnings on Feb 12. The stock has a Zacks Rank #3 and an Earnings ESP of +1.59%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Assurant, Inc. AIZ has an Earnings ESP of +0.62%. This Zacks #3 Ranked company is scheduled to release fourth-quarter earnings on Feb 11.

Radian Group Inc. (RDN - Free Report) is slated to announce fourth-quarter earnings on Feb 5. The stock has an Earnings ESP of +1.76% and a Zacks Rank of 3.

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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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