Willis Towers (WLTW) Gains On Revenue Growth & Acquisitions

Willis Towers Watson (NASDAQ:WLTW) is well-poised for growth on increase in commissions and fees, strategic acquisitions and solid customer retention.

The company has beat estimates in two of the trailing four quarters, with the average being 0.03%.

Shares of Willis Towers rallied 25.3% year to date, underperforming the industry’s rally of 32.7%. Nonetheless, the company’s operational efficiencies, investment in new growth avenues and an effective capital deployment is likely to continue driving the stock.

Organic growth in commissions and fees is driving revenues. The company has witnessed growth in revenues for eight consecutive years. Organic growth across segments and significant synnergies from acquisitions has contributed to the Commissions and fees. Solid customer retention levels and new business are also expected to benefit the company’s top line.

The acquisitions helped the company foray into new markets and expand presence internationally in countries like Italy, Canada, the U.K. and France. The buyout also strengthened product portfolio.

This Zacks Rank #3 (Hold) brokerage insurer has a solid balance sheet, which aided it in deployment of capital for buybacks, dividend payouts, debt repayments, acquisitions and investments that drive and support growth. The company effectively deploys capital to enhance shareholders value. In February 2019, the company hiked dividend by 8.3%.

However, some of the challenges faced by the insurer are increasing operating expenses, higher debt level and exposure to foreign exchange volatility. Willis Towers’ expenses more than doubled in the last five years with net margin contracting 130 basis points.

The Zacks Consensus Estimate for 2019 and 2020 earnings per share is pegged at $10.92 and $11.94, indicating increase of 12.2% and 9.3%, respectively, from the year-ago reported figure. The expected long-term earnings growth rate is pegged at 10.9%.

Stocks to Consider

Some better-ranked stocks from the same space are Kemper Corporation (NYSE:KMPR) , EverQuote, Inc. (NASDAQ:EVER) and MGIC Investment Corporation (NYSE:MTG) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Kemper Corporation provides property and casualty, and life and health insurance to individuals and businesses in the United States. The company beat the Zacks Consensus Estimate in the trailing four quarters, the average beat being 16.40%.

EverQuote Incorporation offers consumers shopping for auto, home, and life insurance quotes. It serves carriers, agents, financial advisors, and indirect distributors and aggregators. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 84.25%.

MGIC Investment provides private mortgage insurance and ancillary services to lenders and government-sponsored entities in the United States. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, the average beat being 12.63%.

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