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Willis Towers (WLTW) to Report Q4 Earnings: What's in Store?

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Zacks Equity Research
·4 min read
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Willis Towers Watson Public Limited Company WLTW is set to report fourth-quarter 2020 results on Feb 9, before market open. The company beat earnings estimates in all the three reported quarters of 2020.

Factors to Note

The company’s fourth-quarter revenues are likely to reflect momentum from new business generation, robust retention rates, favorable renewals, and a positive pricing environment. Case in point, the Zacks Consensus Estimate for revenues is pegged at $2.7 billion, indicating growth of 0.9% from the year-ago quarter.

However, per management, the COVID-19 pandemic might have weighed on revenues and operating results in the to-be-reported quarter. It has to be noted that the discretionary parts of the company’s business have been suffering due to the pandemic in the last two quarters.

Regarding segments, revenues at Human Capital and Benefits (HCB) segment, the largest segment of the company, are likely to reflect fall in demand in Talent and Rewards business. The Zacks Consensus Estimate for segment revenues stands at $846 million, indicating a decline of 2.2% from the year-ago quarter. Nevertheless, higher consulting and brokerage services, and constant client portfolio expansion for both local and global appointments in Health and Benefits may have partly mitigated the decline. Moreover, numerous cost-cutting efforts undertaken may have aided the segment’s performance in the quarter to be reported.

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 alteration of the remuneration model across the company’s certain business lines in Great Britain, which might get reflected in the top line. The consensus estimate for segment revenues stands at $874 million, indicating a decline of 0.3% from the prior-year reported figure.

While net new business and favorable renewals are likely to have resulted in reinsurance growth for Investment, Risk and Reinsurance (IRR) segment in the fourth quarter, addition of TRANZACT might have driven revenues in the Benefits Delivery and Administration (BDA) segment. The consensus estimate for the IRR segment is pegged at $301 million, indicating a decline of 4.1% from the prior-year quarter. Meanwhile, the same for BDA segment stands at $658 million, suggesting year-over year-growth of 10.6%.

Expenses in the quarter to be reported are likely to have risen due to higher salaries and benefits, depreciation, and transaction and integration expenses.

The Zacks Consensus Estimate for earnings per share is pegged at $5.02, suggesting growth of 2.4% from the year-ago reported figure.

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

What the Zacks Model Unveils

Our proven model predicts 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.

Earnings ESP: Willis Towers has an Earnings ESP of +2.44%. This is because the Most Accurate Estimate of $5.14 is pegged higher than the Zacks Consensus Estimate of $5.02. 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 of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

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

Sun Life Financial Inc. SLF has an Earnings ESP of +12.50% and a Zacks Rank #2.

Arch Capital Group Ltd. ACGL has an Earnings ESP of +5.00% and a Zacks Rank #3, currently.

Cincinnati Financial Corporation CINF has an Earnings ESP of +2.72% and a Zacks Rank of 3 at present.

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