On Dec 3, 2014, Aon plc’s (AON) shares scaled a new 52-week high of $93.85 on impressive third-quarter 2014 earnings and efficient capital deployments.
On Oct 31, 2014, Aon reported third-quarter earnings that surpassed the Zacks Consensus Estimate and grew year over year on account of improved underlying operational performance and prudent capital management. In fact, the earnings improvement along with investments in client servicing capabilities like the Global Risk Insight Platform and health care exchanges prompted management to expect stronger operating performance in the upcoming quarter. Management also expects to deliver strong earnings for full-year 2014 based on the above improvements. Notably, this insurance broker delivered positive earnings surprises in all of the last four quarters with an average beat of 7.4%. In fact, the company rose 9% to close at $93.76 in the trading session following the third-quarter results announcement.
Moreover, Aon’s one-year return of 14.4% was higher than that of other industry players like Arthur J Gallagher & Co. (AJG), Willis Group Holdings Public Limited Company (WSH) and Brown & Brown Inc. (BRO) that recorded returns of 3.46%, -2.93% and 3.31%, respectively.
Additionally, the efficient capital deployment strategies have been driving investor confidence in the stock that contributed to the 52-week high. Last month, the company authorized a new share repurchase program worth $5 million. This new buyback was an extension to the company’s existing share repurchase program that had nearly $1.1 billion remaining. Aon’s financial strength allows it to execute share buybacks successfully. As of Sep 30, 2014, the company had cash and cash equivalents worth $382 million. Operating cash flow in the first nine months of 2014 was $883 million. The raised repurchase authorization is expected to boost investors’ confidence. Meanwhile, a decrease in share count owing to increased repurchases should aid bottom-line growth.
Last month, Aon introduced Construction Risk Portal, a web-based tool that provides construction clients a 24×7 access to statutory developments, case law, risk trends and regulatory updates between multiple geographies. This would help them understand the risk challenges better and thus operate efficiently. Further, launch of this portal is expected to help Aon gain more clients thereby aiding revenue growth going forward.
Currently, Aon carries a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment