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What's in Store for Willis Towers (WLTW) This Earnings Season?

·4 min read

Willis Towers Watson Public Limited Company WLTW is set to report first-quarter 2021 results on Apr 29, before market open. The company delivered an earnings surprise in each of the last four quarters, the average being 6.39%.

Factors to Note

The company’s first-quarter revenues are likely to reflect higher consulting and brokerage services, continued expansion of client portfolio for both local and global benefit management appointments, and favorable renewal factors.

The Zacks Consensus Estimate for revenues is pegged at $2.5 billion, indicating growth of 1.7% from the year-ago quarter.

However, Willis Towers anticipates the COVID-19 pandemic to negatively impact revenues and operating results.

Revenues at Human Capital and Benefits (HCB) segment, the largest segment of the company, are likely to have been affected by decline in demand in Talent and Rewards business, due to a decline in compensation survey sales. The Zacks Consensus Estimate for segment revenues stands at $851 million, indicating an increase of 0.1% from the year-ago quarter.

Nevertheless, increased project work in Western Europe and Great Britain in Retirement and better performance at Technology and Administrative Solutions may have partly mitigated the decline.

Revenues at Corporate Risk and Broking (CRB) segment are likely to have benefited from new business generation and strong renewal. Results may have been partly offset by decline in Western Europe, which was primarily due to the impact of COVID-19 on certain insurance lines. The consensus estimate for segment revenues stands at $750 million, indicating an increase of 1.5% from the prior-year reported figure.

Net new business and favorable renewals are likely to have resulted in reinsurance growth for Investment, Risk and Reinsurance (IRR) segment in the first quarter. The improvement is likely to have been partially offset by declines in other businesses with reduced demand for discretionary work having negatively impacted revenues in both the Insurance Consulting and Technology and Investments business. The consensus estimate for the IRR segment is pegged at a loss of $604 million, indicating a decline of 1.8% from the prior-year quarter.

Growth in Individual Marketplace, primarily by TRANZACT, along with growth in Medicare Advantage products might have driven organic revenues in the Benefits Delivery and Administration (BDA) segment. The consensus estimate for BDA segment stands at $269 million, suggesting year-over year-growth of 16.4%.

Expenses in the quarter to be reported are likely to have risen due to higher salaries and benefits, depreciation, transaction and integration expenses as well as other operating expenses and higher restructuring costs.

The Zacks Consensus Estimate for earnings per share is pegged at $3.26, suggesting decline of 2.4% from the year-ago reported figure.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Willis Towers this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Willis Towers has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at $3.26. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Willis Towers Watson Public Limited Company Price and EPS Surprise

Willis Towers Watson Public Limited Company Price and EPS Surprise
Willis Towers Watson Public Limited Company Price and EPS Surprise

Willis Towers Watson Public Limited Company price-eps-surprise | Willis Towers Watson Public Limited Company Quote

Zacks Rank: Willis Towers carries a Zacks Rank of 4 (Sell).

Stocks to Consider

Some stocks worth considering from the insurance space with a perfect mix of elements to surpass estimates in their upcoming quarterly releases are as follows:

Aon plc AON has an Earnings ESP of +0.79% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Palomar Holdings, Inc. PLMR has an Earnings ESP of +6.93% and a Zacks Rank of 3.

The Allstate Corporation ALL has an Earnings ESP of +2.67% and a Zacks Rank of 3.

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