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What's in the Cards for Willis Towers (WLTW) in Q3 Earnings?

Zacks.com logo Zacks.com 10/26/2020

Willis Towers Watson Public Limited Company WLTW is slated to report third-quarter 2020 results on Oct 29, before market open. The company delivered an earnings surprise of 11.11% in the last reported quarter.

Factors to Consider

Revenues in the third quarter are likely to have been aided by higher commissions, net new business, solid retention, favorable renewals, increased consulting and brokerage services and favorable rates. However, Willis Towers anticipates COVID-19 pandemic to negatively impact revenues and operating results. The Zacks Consensus Estimate for revenues is pegged at $1.9 billion, indicating a decline of 0.3% from the year-ago quarter reported figure.

Human Capital & Benefits segment’s revenues, the largest segment of the company, are likely to have been affected by decline in demand in Talent and Rewards business. The decline is likely to have been offset by increased consulting and brokerage services, continued expansion of client portfolio for both local and global appointments in Health and Benefits, increased project work primarily in Great Britain and Western Europe in Retirement and Technology and Administration Solutions business. The Zacks Consensus Estimate for segment revenues is pegged at $778 million, indicating a downside of 3.6% from the year-ago quarter reported figure, given the challenges faced due to the pandemic.

The uncertain economic conditions related to COVID-19 may have affected Talent and Rewards revenues in the soon-to-be-reported quarter.

Corporate Risk & Broking segment’s revenues are likely to have benefited from new business generation along with strong renewals and favorable rates.

Investment, Risk & Reinsurance segment’s revenues are likely to have been aided by net new business, favorable renewals, strong technology sales and growth in net commissions.

Expenses are likely to have risen due to higher salaries and benefits, other operating expenses, depreciation, transaction and integration expenses.

The Zacks Consensus Estimate for earnings per share is pegged at $1.28, suggesting nearly 2.29% decrease from the year-ago reported figure.

What the Zacks Model Says

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 +3.81%. This is because the Most Accurate Estimate of $1.33 is pegged higher than the Zacks Consensus Estimate of $1.28. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Willis Towers Watson Public Limited Company Price and EPS Surprise

chart, line chart, scatter chart: Willis Towers Watson Public Limited Company Price and EPS Surprise © Provided by Zacks.com 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 currently carries a Zacks Rank of 3.

Other Stocks to Consider

Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:

Marsh McLennan Companies, Inc. MMC has an Earnings ESP of +7.03% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arthur J. Gallagher Co. AJG has an Earnings ESP of +1.34% and a Zacks Rank #2.

Manulife Financial Corp MFC has an Earnings ESP of +3.85% and a Zacks Rank of 3.

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