Willis Towers Watson (NasdaqGS:WLTW) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

Willis Towers Watson Public Limited Company (NasdaqGS:WLTW) is scheduled to report Q3 earnings results on October 29, 2020.

The company is expected to report earnings of $1.30/share on revenue of $1.988 billion. The consensus earnings per share (EPS) of $1.30/share is based on a poll of 14 analysts and represents a decline in eps of −1.0% over the same quarter last year, when the company reported earnings of $1.31/share.

The revenue forecast of $1.988 billion based on a poll of 9 analysts implies a year-over-year (YoY) decline in revenue of −0.1%. Last year the company reported $1.989 billion in revenue for the quarter.

Expected to report EPS contraction of −1.0% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,987.70 $1,989.00 −0.1%
EPS $1.30 $1.31 −1.0%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Willis Towers Watson Public Limited Company for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.66 $1.80 8.7% Beat
Q1, 2020 $3.13 $3.34 6.7% Beat
Q4, 2019 $4.86 $4.90 0.9% Beat
Q3, 2019 $1.30 $1.31 0.5% Beat
Q2, 2019 $1.75 $1.78 1.6% Beat
Q1, 2019 $3.02 $2.98 −1.4% Missed
Q4, 2018 $4.05 $4 −1.4% Missed
Q3, 2018 $1.13 $1.32 16.4% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $210.13 $210.01 −0.1% Decline
April 30, 2020 $175.26 $183.34 4.6% Increase
February 6, 2020 $220.06 $210.25 −4.5% Decline
October 31, 2019 $190.24 $188.99 −0.7% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.55, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.55 implies a 0.5% chance of earnings manipulation.

Fundamentals And Technical Analysis

Willis Towers Watson Public Limited Company is currently trading at $203.28/share, down −3.1% for the day. The company is trading at approximately 92.0% of its 52-week high of $220.97/share. The company’s stock price is down −3.2% since the last earnings report and down −2.9% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 37.85 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:WLTW Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 25.73 and a forward P/E multiple of 18.03.

Willis Towers Watson Public Limited Company’s current share price also implies a price-to-book (P/B) multiple of 2.53. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $203.28
P/E Ratio 25.7x
P/E Ratio (Fwd) 18.0x
PEG Ratio 1.3
Total Debt / Total Capital 19.7%
Levered Free Cash Flow $1.202 billion
EV / EBITDA 14.5x

Finbox

Willis Towers Watson Public Limited Company is a large-cap stock with a market capitalization of $26.194 billion and a total enterprise value of $31.871 billion. The company operates in the Financials sector and the Insurance industry.

Willis Towers Watson Public Limited Company operates as an advisory, broking, and solutions company worldwide. The company’s Human Capital and Benefits segment offers actuarial support, plan design, and administrative services for traditional pension and retirement savings plans; plan management consulting, broking, and administration services for health and group benefit programs; and benefits outsourcing services. It also provides advice, data, software, and products to address clients’ total rewards and talent issues. Its Corporate Risk and Broking segment offers risk advice, insurance brokerage, and consulting services in the areas of property and casualty, financial lines, and transport. The company’s Investment, Risk and Reinsurance segment offers capital markets-based products to insurance and reinsurance companies; software and technology, risk and capital management, products and pricing, financial and regulatory reporting, financial and capital modeling, merger and acquisition, outsourcing, and business management services; investment advice and solutions to pension funds and institutional investors; wholesale insurance broking services to retail and wholesale brokers; and underwriting and capital management, capital market, and advisory and brokerage services. Its Benefits Delivery and Administration segment provides primary medical and ancillary benefit exchange, and outsourcing services to active employees and retirees in the group and individual markets. This segment delivers healthcare and reimbursement accounts, including health savings accounts, health reimbursement arrangements, flexible spending accounts, and other consumer-directed accounts. The company was formerly known as Willis Group Holdings Public Limited Company and changed its name to Willis Towers Watson Public Limited Company in January 2016. Willis Towers Watson Public Limited Company was founded in 1828 and is based in London, the United Kingdom.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.