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WTW Lags Industry, Trades at a Discount: What Should Investors Do Now?
WTWWillis Towers Watson(WTW) ZACKS·2025-04-09 14:55

Core Viewpoint - Shares of Willis Towers Watson Public Limited Company (WTW) have gained 14.5% in the past year, underperforming the industry and Finance sector growth of 22.6% and 5.1% respectively, while outperforming the Zacks S&P 500 composite's decline of 1.5% [1] Company Performance - WTW has a market capitalization of 30.01billionandanaveragetradingvolumeof0.6millionsharesoverthelastthreemonths[1]WTWsharesaretradingbelowthe50daymovingaverage,indicatingabearishtrend[1]ValuationMetricsWTWsharesaretradingatapricetoforward12monthearningsof17.17X,lowerthantheindustryaverageof21.66X,providingabetterentrypointforinvestors[3]GrowthProjectionsTheZacksConsensusEstimateforWTWs2025earningspershareindicatesayearoveryearincreaseof0.230.01 billion and an average trading volume of 0.6 million shares over the last three months [1] - WTW shares are trading below the 50-day moving average, indicating a bearish trend [1] Valuation Metrics - WTW shares are trading at a price to forward 12-month earnings of 17.17X, lower than the industry average of 21.66X, providing a better entry point for investors [3] Growth Projections - The Zacks Consensus Estimate for WTW's 2025 earnings per share indicates a year-over-year increase of 0.2%, with estimates for 2026 earnings per share and revenues showing increases of 13.6% and 5.5% respectively [4] Earnings Performance - WTW has surpassed earnings estimates in each of the last four quarters, with an average beat of 6.29% [5] - The company has an impressive Growth Score of B, indicating strong growth prospects [5] Strategic Focus - WTW's growth strategy includes improving operating margins, increasing free cash flow conversion, and driving sustainable revenue growth [6] - The company is focusing on core opportunities in Risk and Broking and Individual Marketplace to spur long-term growth [6] Revenue Drivers - Strong performance in Health, Wealth & Career and Risk & Broking segments, supported by solid customer retention and geographic diversification, has fueled revenue growth for 15 consecutive quarters [8] Acquisitions and Financial Health - Strategic acquisitions have expanded WTW's geographical footprint and product portfolio [9] - The company is improving its liquidity and maintaining a solid balance sheet, which supports capital deployment for buybacks, dividends, and acquisitions [9] Shareholder Returns - WTW has a six-year CAGR of 5.7% in dividends and expects share repurchases to total approximately 1.5 billion in 2025 [10] Cost Challenges - Rising expenses, including higher salaries and benefits, have led to margin contraction, although WTW estimates long-term margin expansion [11] - WTW's trailing 12-month ROE of 20% is below the industry average of 29.5%, indicating inefficiency in using shareholders' funds [12] Conclusion - WTW has a strong product portfolio and a solid track record of strategic acquisitions, with favorable growth estimates in key segments [13]