Willis Towers Watson Public Limited Company WLTW is poised for long-term growth on the back of organic growth in commissions and fees, market presence and strong capital position. The company has a favorable Growth Score of A. This style score analyzes the growth prospects of a company. The expected long-term earnings growth rate is 12.4%, better than the industry’s average of 11.2%.
Recently, the company reported fourth quarter and full-year 2018 results. While 2018 bottom line grew 21%, revenues increased 4% on a reported basis. Organic growth was 5%. The company outperformed estimates in three of the four quarters of 2018 with the average beat being 5.57%.
Banking on sustained solid operational performance, the company projects 4% organic revenue growth in 2019. Adjusted operating margin should hover around 20% while adjusted earnings are estimated between $10.60 and $10.85 per share. Free cash flow is expected to grow at least 15%. The Zacks Consensus Estimate for current-year earnings is pegged at $10.69, indicating 9.9% year-over-year increase on 4% higher revenues.
Shares of this Zacks Rank #3 (Hold) insurer have gained 13.6% year to date, outperforming the S&P 500 Index’s gain of 11.8%.
Organic growth across segments, rich contribution from acquisitions, geographic diversification, solid customer retention levels and growing new business should continue to support growth.
Willis Towers’ exchange business too should perform steadily. The company maintains a robust 2019 sales pipeline in both middle and large markets. For 2019, the company has already enrolled about 0.3 million lives and expects to enroll another 0.06 to 0.07 retirees in the rest of the year.
Willis Towers is a leading global advisory, broking and solutions company. This insurance brokerage carries an impressive VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and most promising momentum.
Willis Towers has a strong capital management policy in place. The company remains committed to maintaining the target dividend payout ratio of about 25%. Its dividend yield of 1.4% betters the industry average of 1.2%, making it an attractive pick for yield-seeking investors. It also bought back $602 million worth shares in 2018. The company targets to generate free cash flow growth of at least 15% year over year for the next three years.
Stocks to Consider
Some top-ranked stocks from the insurance industry can also consider Arch Capital Group Ltd. ACGL, Berkshire Hathaway Inc. BRK.B and Torchmark Corporation TMK.
Arch Capital Group provides property, casualty and mortgage insurance and reinsurance products worldwide. The company delivered positive surprises in all the last four reported quarters, the average being 14.72%. The company has a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Berkshire Hathaway provides property and casualty insurance and reinsurance plus life, accident and health reinsurance besides operating railroad systems in North America. The company came up with positive surprises in three of the preceding four reported quarters, the average beat being 4.31%. The company is a Zacks #1 Ranked player.
Torchmark provides various life and health insurance products and annuities in the United States, Canada and New Zealand. The company pulled off positive surprises in three of the preceding four reported quarters, the average beat being 2%. The company holds a Zacks Rank #2 (Buy).
Zacks' Top 10 Stocks for 2019
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