Aon - Aggressive Growth

By Zacks | June 06, 2012 AAA

Aon (AON) has topped the
Zacks Consensus Estimate in three of six quarters and shows
excellent earnings growth making it a Zacks #1 Rank (Strong Buy).

Company Description

Aon provides risk management services, insurance and reinsurance
brokerage and human resource consulting and outsourcing. The
company's risk management services segment offers solutions for
property liability, general liability, professional liability,
directors' and officers' liability, workers' compensation and
various healthcare products along with others. Its insurance and
reinsurance brokerage segment offers property and casualty
reinsurance and specialty lines, which includes medical
malpractice, accident, life, and health, as well as capital
management transaction and advisory services. Aon PLC, formally
known as Aon Corporation, is headquartered in Chicago, Illinois.

AON Meets or Beats Expectations in Four of Last Six
Quarters

AON topped the Zacks Consensus
Estimate in three of the last six quarters. The other three
quarters saw two earnings misses and one quarter that was in line
with expectations. Over the three positive earnings surprises, the company topped estimates by an
average of $0.017 per share which translated into a 2% surprise.

Despite the positive surprises, Wall Street hasn't taken much
notice and as a result the stock has sold off on average following
the earnings report. The average move for the three positive
earnings surprises was less than -1%.

The largest impact on shares came following the December 2010
quarter. AON reported earnings of $0.84 per
share, $0.03 ahead of the Zacks Consensus Estimate. That quarter
saw revenues of $2.9 billion, about $69 million ahead of
expectations. The beats on the top and bottom line helped lift
the stock higher by 5.5% in the session following the report.

AON- ticker AON></p> <p> AON Most Recent Report</p> <p> On May 4, the company reported earnings of $0.98, $0.08 less<br />  than the Zacks Consensus Estimate of $1.06.  7.5% negative<br />  earnings surprise helped push the stock lower by $3.27 or 6.4% in<br />  the session following the release. Revenue in the March 2011<br />  quarter was in line with expectations and grew 3% from the<br />  previous year.</p> <p> AON Sees Estimates Moving Higher</p> <p> Estimates for AON have been rising of late.  The<br />  Zacks<br />  Consensus Estimate for 2012 for AON Automotive stood<br />  at $3.63  </p> <p> as of  </p> <p> January 2012. The consensus has since moved higher to $4.18.  Over  </p> <p> the same time period estimates for 2013 have moved from $4.17 to<br />  $4.77. The implied earnings growth rate of more than 14% is<br />  just what aggressive growth investors are seeking.</p> <p> Valuation</p> <p> AON trades in line with most of the valuation metrics that<br />  aggressive growth investors tend to follow.  The trailing PE<br />  multiple of 13x is below the 16x industry average.  The forward PE<br />  is mostly in line with the industry average of 10.2x.  Price to<br />  book of 1.75x is still well below the 3x metric that begins to<br />  become too expensive, but is still higher than the 1x industry<br />  average.  The key in the valuation that makes AON stand out is the<br />  consistent revenue growth the company has displayed versus the<br />  contraction that has been witnessed by the industry average.</p> <p> The Chart </p> <p> A quick look at price and consensus chart shows a choppy stock and<br />  an equally choppy earnings estimate line history.  The years 2009<br />  -2013 have seen estimates start high and finish low, not exactly<br />  what aggressive growth investor want to see.  That stated, the<br />  earnings growth, represented by the gap between lines, has<br />  increased of late and there has been a significant positive<br />  revision to 2012 and 2013 estimates. The improved outlook for<br />  future estimates and its attractive valuation makes AON a stock<br />  worth a deeper look.  AON is a<br />  Zacks #1 Rank (Strong Buy).</p> <p> <img src=

You May Also Like

Related Analysis
  1. Stock Analysis

    Merck Up on OncoEthix Acquisition Deal, Oncology in Focus - Analyst Blog

  2. Stock Analysis

    ALLETE Buys NRG Energy's Storm Lake 1 Iowa Wind Farm - Analyst Blog

  3. Stock Analysis

    Starwood Expands in Colombia with Four Points by Sheraton - Analyst Blog

  4. Stock Analysis

    U.S. Bancorp to Pay $6M to Settle Trustee Role Related Suit - Analyst Blog

  5. Stock Analysis

    Wells Fargo Brokerage Units Fined by FINRA for AML Failures - Analyst Blog

Trading Center