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Should You Retain Willis Towers (WTW) Stock in Your Portfolio?

Willis Towers Watson Public Limited Company WTW has been gaining momentum on the back of growing healthcare premiums, increased consulting work and software sales, strategic buyouts and effective capital deployment.

Growth Projections

The Zacks Consensus Estimate for Willis Towers’ 2023 earnings is pegged at $14.14 per share, indicating a 5.4% increase from the year-ago reported figure on 6.8% higher revenues of $9.47 billion. The consensus estimate for 2024 earnings is pinned at $16.08 per share, indicating a 13.7% increase from the year-ago reported figure on 5.2% higher revenues of $9.97 billion.

Zacks Rank & Price Performance

Willis Towers currently has a Zacks Rank #3 (Hold). The stock has lost 2.4% against the industry’s rise of 11.5% in the past year.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Business Tailwinds

The Health, Wealth & Career segment is expected to gain from higher demand for products and advisory work, new client appointments and growing healthcare premiums. Increased consulting work, strong client demand for talent and compensation products and employee engagement offerings are also likely to add to the upside.

The Corporate Risk and Broking segment is expected to gain from double-digit growth across the global lines of business, notably in Aerospace, Natural Resources and FINEX, improved client retention as well as strong contributions from both construction and M&A solutions. Increased software sales and advisory work should continue to drive the Insurance Consulting and Technology business.

Willis Towers’ growth strategy focuses on core opportunities with the highest growth and returns. The broker innovated and developed its offerings in markets and boosted its abilities in faster-growth markets. Strategic buyouts add to the upside apart from expanding its geographical footprint, increasing capabilities and strengthening its portfolio.

The company has been improving its liquidity while maintaining a solid balance sheet. WTW has sufficient cash reserves to meet its short-term debt obligations. It expects approximately 12% free cash flow margin for 2023. Looking beyond 2023, Willis Towers expects the free cash flow margin to increase due to improved cash conversion in TRANZACT business and the abatement of transformation-related spend. This expansion in free cash flow margin, on top of expected organic revenue growth, should drive strong long-term growth in free cash flow.

A solid balance sheet and steady cash flow are expected to help the company engage in capital deployment for buybacks, dividend payouts, debt repayments, acquisitions and investments that drive and support growth.

The company remains committed to enhancing its shareholders value. With a 2.4% hike in dividend in February 2023, its dividend witnessed an eight-year CAGR (2016-2023) of nearly 7.2%. As of Sep 30, 2023, nearly $1.5 billion remained on the current repurchase authority.

WTW remains focused on deploying excess capital and cash flow into share repurchases. With a solid financial position, it intends to continue to reward its shareholders, technology and new business opportunities and pursue opportunistic mergers and acquisitions.

Stocks to Consider

Some better-ranked stocks from the brokerage insurance industry are Arthur J. Gallagher & Co. AJG, Brown & Brown, Inc. BRO and Marsh & McLennan Companies, Inc. MMC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arthur J. Gallagher has a solid track record of beating earnings estimates in each of the last four quarters, the average being 2.23%. In the past year, AJG has gained 22.7%.

The Zacks Consensus Estimate for AJG’s 2023 and 2024 earnings per share is pegged at $8.79 and $10.11, indicating a year-over-year increase of 13.5% and 15%, respectively.

Brown & Brown has a solid track record of beating earnings estimates in each of the last four quarters, the average being 12.25%. In the past year, BRO has surged 23.8%.

The Zacks Consensus Estimate for BRO’s 2023 and 2024 earnings per share is pegged at $2.76 and $3.02, indicating a year-over-year increase of 21% and 9.4%, respectively.

Marsh & McLennan has a solid track record of beating earnings estimates in each of the last four quarters, the average being 6.45%. In the past year, MMC has gained 13.5%.

The Zacks Consensus Estimate for MMC’s 2023 and 2024 earnings per share is pegged at $7.93 and $8.67, indicating a year-over-year increase of 15.7% and 9.3%, respectively.

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Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report

Arthur J. Gallagher & Co. (AJG) : Free Stock Analysis Report

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Willis Towers Watson Public Limited Company (WTW) : Free Stock Analysis Report

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