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Willis Towers (WLTW) to Report Q3 Earnings: What's in Store?

Zacks Equity Research

Willis Towers Watson Public Limited Company WLTW will report third-quarter 2019 results on Oct 31 after market close. The company delivered positive earnings surprise in two of the last four quarters with the average beat being 4.73%.

Let’s see how things have shaped up for this announcement.

Willis Towers’ third-quarter results are likely to benefit from higher organic commissions and fees, solid customer retention levels, growth in new business and strong exchange business.

Commissions and fees are expected to have benefited from organic growth across segments and rich contribution from acquisitions as well as geographic diversification. The TRANZACT acquisition is likely to have enhanced Willis Towers’ retail capabilities to expand in the Medicare market.

Human Capital & Benefits, the largest segment of the company, is likely to have benefited from new businesses and strength in core service offerings. The Zacks Consensus Estimate for segment revenues is pegged at $810 million, indicating an upside of 410% from the year-ago quarter reported figure.

Corporate Risk & Broking and Investment, Risk & Reinsurance segments’ revenues are expected to have benefited from new business and higher renewals. The Zacks Consensus Estimate for Corporate Risk & Broking revenues is pegged at $645 million, implying an increase of 3.7% from the year-ago reported figure while Investment, Risk & Reinsurance revenues is pegged at $645 million, implying an increase of 4.7% from the year-ago reported quarter.

Continued enrolment and a robust sales pipeline are expected to have driven exchange business.

The Zacks Consensus Estimate for revenues is pegged at $1.9 billion, indicating an upside of 6.6% from the year-ago reported quarter.

High debt level is likely to have increased interest expenses. Expenses are likely to have weighed on margin expansion. Adverse forex is likely to have been a headwind.

The Zacks Consensus Estimate for earnings per share is pegged at $1.30, suggesting 1.5% year-over-year decrease.

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

What Our Quantitative Model Predicts

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 this is not the case as you can see below.

Earnings ESP: Willis Towers has an Earnings ESP of -1.93%. This is because the Most Accurate Estimate of $1.27 is pegged lower than the Zacks Consensus Estimate of $1.30. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Willis Towers carries a Zacks Rank #2.    

Stocks to Consider

Some stocks from the insurance industry with the apt combination of elements to surpass estimates this reporting cycle are as follows:

Marsh & McLennan Companies MMC is set to report third-quarter earnings on Oct 29. It has an Earnings ESP of +2.90% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Allstate Corporation ALL has an Earnings ESP of +1.64% and is a Zacks #1 Ranked player. The company is slated to announce third-quarter earnings on Oct 29.

Chubb Limited CB has an Earnings ESP of +0.44% and carries a Zacks Rank of 3. The company is set to release third-quarter earnings on Oct 29.

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