Toronto, Canada – Willis Towers Watson, a leading insurance and risk management firm, recently announced its quarterly results for Q4 2023, exceeding expectations and providing a strong outlook for FY 2024. Following the announcement, the company’s stock saw an increase of about 8%. Despite this jump, analysts believe that the stock remains undervalued compared to its growth prospects and peers.
In Q4 2023, Willis Towers Watson reported an adjusted EPS of $7.44, surpassing consensus estimates by $0.38 and representing an 18% increase from the same period a year ago. The company’s revenue for the quarter slightly missed consensus estimates but still showed a 7% year-over-year increase. Additionally, the company’s strong performance is reflected in the 180bps increase in adjusted operating margin, a result of the company’s ongoing transformation plan to drive efficiency and reduce costs.
Looking ahead to FY 2024, Willis Towers Watson projects an adjusted EPS of $15.40 – $17.00, in line with consensus estimates, with a potential increase in adjusted operating margin. This positive outlook is supported by the company’s defensive business model with solid growth prospects, led by its Health, Wealth & Career and Risk & Broking business segments.
Furthermore, the company’s valuation relative to the broader market and its peers is viewed as attractive, with strong historical performance in terms of beating consensus estimates and a consistent buyback program contributing to investor confidence in the stock. However, potential risks such as a spike in interest rates and a global economic slowdown should be considered, but the company’s moderate leverage and business resilience are expected to mitigate these risks.
In conclusion, Willis Towers Watson’s strong quarterly performance and optimistic outlook for FY 2024 have positioned the company as an attractive investment opportunity. The stock’s undervaluation, coupled with its defensive business model and growth prospects, indicates a favorable Buy rating for investors.