Aon Reaches New 52-Week High on Strong Q1, Dividend Hike
On May 31, 2016, shares of Aon plc AON hit a 52-week high of $109.65, driven by better-than-expected first-quarter 2016 results and dividend hike. About three million shares exchanged hands in the last trading session and the stock finally closed at $109.27, up 0.6%. Year to date, the stock has returned 18.5%, comparing favorably with 2.6% by S&P.
Aon’s operating earnings of $1.26 per share in the first quarter surpassed the Zacks Consensus Estimate by 1.5% driven by a decline in total operating expense and a lower share count resulting from share repurchases during the quarter. This Zacks Rank #3 (Hold) insurance broker delivered positive surprises in the last four quarters, with an average beat of 3.12%.
Expenses decreased on account of favorable forex, decline in expenses related to net divestitures and lower intangible asset amortization. Operating margin thus expanded 20 basis points to 18.5% in the quarter.
Aon’s Risk Solution segment performed better than the HR Solutions’ segment in the first quarter.
Also, riding on the strength of its operational performance, the company engaged in effective capital deployment that in turn enhanced shareholders’ value. Aon bought back about $750 million worth shares in the first quarter. In addition, the board of directors approved a 10% increase in its quarterly dividend.
These positives drove the Zacks Consensus Estimate higher on upward revisions in the last 30 days. The Zacks Consensus Estimate increased 0.8% to $6.57 for 2016 and 0.4% to $7.32 for 2017. The long-term earnings growth rate is expected to be 11%.
Stocks to Consider
Some better-ranked insurers are Hannover Rück SE HVRRY, Marsh & McLennan Companies, Inc. MMC and Trupanion, Inc. TRUP. Each of these stocks carries a Zacks Rank #2 (Buy).
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TRUPANION INC (TRUP): Free Stock Analysis Report
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