WILLIS TOWERS WATSON PLC (WTW) Stock Fundamental Analysis
NASDAQ:WTW - Nasdaq - IE00BDB6Q211 - Common Stock - Currency: USD
Taking everything into account, WTW scores 4 out of 10 in our fundamental rating. WTW was compared to 143 industry peers in the Insurance industry. WTW has only an average score on both its financial health and profitability. WTW is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
In the past year WTW was profitable.
In the past year WTW had a positive cash flow from operations.
WTW had positive earnings in 4 of the past 5 years.
WTW had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of -0.35%, WTW is doing worse than 79.43% of the companies in the same industry.
The Return On Equity of WTW (-1.23%) is worse than 78.01% of its industry peers.
With an excellent Return On Invested Capital value of 11.22%, WTW belongs to the best of the industry, outperforming 95.04% of the companies in the same industry.
WTW had an Average Return On Invested Capital over the past 3 years of 8.91%. This is above the industry average of 4.59%.
The 3 year average ROIC (8.91%) for WTW is below the current ROIC(11.22%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.35% | ||
| ROE | -1.23% | ||
| ROIC | 11.22% |
ROA(3y)2.15%
ROA(5y)4.22%
ROE(3y)6.64%
ROE(5y)12.19%
ROIC(3y)8.91%
ROIC(5y)7.27%
1.3 Margins
WTW has a better Operating Margin (21.54%) than 81.56% of its industry peers.
WTW's Operating Margin has improved in the last couple of years.
WTW does not have Profit Margin and Gross Margin available, so we won't be analyzing them here.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 21.54% | ||
| PM (TTM) | N/A | ||
| GM | N/A |
OM growth 3Y10.88%
OM growth 5Y11.06%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3YN/A
GM growth 5YN/A
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so WTW is still creating some value.
WTW has less shares outstanding than it did 1 year ago.
The number of shares outstanding for WTW has been reduced compared to 5 years ago.
Compared to 1 year ago, WTW has a worse debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 1.71, we must say that WTW is in the distress zone and has some risk of bankruptcy.
With an excellent Altman-Z score value of 1.71, WTW belongs to the best of the industry, outperforming 86.52% of the companies in the same industry.
The Debt to FCF ratio of WTW is 4.19, which is a neutral value as it means it would take WTW, 4.19 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of WTW (4.19) is worse than 63.83% of its industry peers.
WTW has a Debt/Equity ratio of 0.67. This is a neutral value indicating WTW is somewhat dependend on debt financing.
The Debt to Equity ratio of WTW (0.67) is worse than 82.27% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.67 | ||
| Debt/FCF | 4.19 | ||
| Altman-Z | 1.71 |
ROIC/WACC1.35
WACC8.34%
2.3 Liquidity
A Current Ratio of 1.20 indicates that WTW should not have too much problems paying its short term obligations.
With an excellent Current ratio value of 1.20, WTW belongs to the best of the industry, outperforming 82.98% of the companies in the same industry.
WTW has a Quick Ratio of 1.20. This is a normal value and indicates that WTW is financially healthy and should not expect problems in meeting its short term obligations.
WTW's Quick ratio of 1.20 is amongst the best of the industry. WTW outperforms 82.98% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.2 | ||
| Quick Ratio | 1.2 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 15.99% over the past year.
Measured over the past years, WTW shows a quite strong growth in Earnings Per Share. The EPS has been growing by 9.03% on average per year.
WTW shows a small growth in Revenue. In the last year, the Revenue has grown by 4.71%.
The Revenue has been growing slightly by 3.48% on average over the past years.
EPS 1Y (TTM)15.99%
EPS 3Y7.25%
EPS 5Y9.03%
EPS Q2Q%9.27%
Revenue 1Y (TTM)4.71%
Revenue growth 3Y3.34%
Revenue growth 5Y3.48%
Sales Q2Q%4.15%
3.2 Future
Based on estimates for the next years, WTW will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.39% on average per year.
Based on estimates for the next years, WTW will show a small growth in Revenue. The Revenue will grow by 4.55% on average per year.
EPS Next Y2.47%
EPS Next 2Y7.62%
EPS Next 3Y10.63%
EPS Next 5Y9.39%
Revenue Next Year-2.16%
Revenue Next 2Y1.8%
Revenue Next 3Y3.25%
Revenue Next 5Y4.55%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 19.29, which indicates a rather expensive current valuation of WTW.
Based on the Price/Earnings ratio, WTW is valued a bit more expensive than 66.67% of the companies in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 29.63, WTW is valued a bit cheaper.
The Price/Forward Earnings ratio is 18.82, which indicates a rather expensive current valuation of WTW.
WTW's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. WTW is more expensive than 65.25% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of WTW to the average of the S&P500 Index (22.68), we can say WTW is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.29 | ||
| Fwd PE | 18.82 |
4.2 Price Multiples
WTW's Enterprise Value to EBITDA ratio is in line with the industry average.
WTW's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. WTW is more expensive than 64.54% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.68 | ||
| EV/EBITDA | 13.81 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates WTW does not grow enough to justify the current Price/Earnings ratio.
PEG (NY)7.8
PEG (5Y)2.14
EPS Next 2Y7.62%
EPS Next 3Y10.63%
5. Dividend
5.1 Amount
WTW has a Yearly Dividend Yield of 1.09%. Purely for dividend investing, there may be better candidates out there.
WTW's Dividend Yield is comparable with the industry average which is at 3.09.
With a Dividend Yield of 1.09, WTW pays less dividend than the S&P500 average, which is at 2.29.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.09% |
5.2 History
The dividend of WTW is nicely growing with an annual growth rate of 6.49%!
WTW has paid a dividend for at least 10 years, which is a reliable track record.
As WTW did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
Dividend Growth(5Y)6.49%
Div Incr Years7
Div Non Decr Years7
5.3 Sustainability
WTW has negative earnings and hence a negative payout ratio. The dividend may be in danger.
WTW's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP-361.22%
EPS Next 2Y7.62%
EPS Next 3Y10.63%
325.95
+1.22 (+0.38%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners93.91%
Inst Owner Change2.3%
Ins Owners0.25%
Ins Owner Change1.64%
Market Cap32.53B
Analysts75.2
Price Target364.23 (11.74%)
Short Float %1.12%
Short Ratio1.78
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.09% |
Yearly Dividend3.5
Dividend Growth(5Y)6.49%
DP-361.22%
Div Incr Years7
Div Non Decr Years7
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.58%
Min EPS beat(2)0.27%
Max EPS beat(2)6.89%
EPS beat(4)3
Avg EPS beat(4)3.73%
Min EPS beat(4)-0.4%
Max EPS beat(4)8.14%
EPS beat(8)6
Avg EPS beat(8)1.91%
EPS beat(12)10
Avg EPS beat(12)2.09%
EPS beat(16)14
Avg EPS beat(16)4.84%
Revenue beat(2)0
Avg Revenue beat(2)-1.35%
Min Revenue beat(2)-1.84%
Max Revenue beat(2)-0.87%
Revenue beat(4)0
Avg Revenue beat(4)-1.7%
Min Revenue beat(4)-2.74%
Max Revenue beat(4)-0.87%
Revenue beat(8)2
Avg Revenue beat(8)-0.6%
Revenue beat(12)3
Avg Revenue beat(12)-1.23%
Revenue beat(16)3
Avg Revenue beat(16)-2.78%
PT rev (1m)-0.46%
PT rev (3m)11.75%
EPS NQ rev (1m)-7.81%
EPS NQ rev (3m)-10.19%
EPS NY rev (1m)-4.96%
EPS NY rev (3m)-5.24%
Revenue NQ rev (1m)-3.87%
Revenue NQ rev (3m)-7.79%
Revenue NY rev (1m)-2.36%
Revenue NY rev (3m)-3.72%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.29 | ||
| Fwd PE | 18.82 | ||
| P/S | 3.28 | ||
| P/FCF | 25.68 | ||
| P/OCF | 21.52 | ||
| P/B | 4.1 | ||
| P/tB | N/A | ||
| EV/EBITDA | 13.81 |
EPS(TTM)16.9
EY5.18%
EPS(NY)17.32
Fwd EY5.31%
FCF(TTM)12.69
FCFY3.89%
OCF(TTM)15.15
OCFY4.65%
SpS99.49
BVpS79.55
TBVpS-21.58
PEG (NY)7.8
PEG (5Y)2.14
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.35% | ||
| ROE | -1.23% | ||
| ROCE | 14.21% | ||
| ROIC | 11.22% | ||
| ROICexc | 12.84% | ||
| ROICexgc | 55.02% | ||
| OM | 21.54% | ||
| PM (TTM) | N/A | ||
| GM | N/A | ||
| FCFM | 12.76% |
ROA(3y)2.15%
ROA(5y)4.22%
ROE(3y)6.64%
ROE(5y)12.19%
ROIC(3y)8.91%
ROIC(5y)7.27%
ROICexc(3y)9.91%
ROICexc(5y)8.3%
ROICexgc(3y)47%
ROICexgc(5y)41.64%
ROCE(3y)11.28%
ROCE(5y)9.21%
ROICexcg growth 3Y11.39%
ROICexcg growth 5Y19.91%
ROICexc growth 3Y21.14%
ROICexc growth 5Y22.97%
OM growth 3Y10.88%
OM growth 5Y11.06%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3YN/A
GM growth 5YN/A
F-Score5
Asset Turnover0.36
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.67 | ||
| Debt/FCF | 4.19 | ||
| Debt/EBITDA | 2.05 | ||
| Cap/Depr | 53.73% | ||
| Cap/Sales | 2.47% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 58.27% | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.2 | ||
| Quick Ratio | 1.2 | ||
| Altman-Z | 1.71 |
F-Score5
WACC8.34%
ROIC/WACC1.35
Cap/Depr(3y)45.88%
Cap/Depr(5y)41.14%
Cap/Sales(3y)2.44%
Cap/Sales(5y)2.57%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)15.99%
EPS 3Y7.25%
EPS 5Y9.03%
EPS Q2Q%9.27%
EPS Next Y2.47%
EPS Next 2Y7.62%
EPS Next 3Y10.63%
EPS Next 5Y9.39%
Revenue 1Y (TTM)4.71%
Revenue growth 3Y3.34%
Revenue growth 5Y3.48%
Sales Q2Q%4.15%
Revenue Next Year-2.16%
Revenue Next 2Y1.8%
Revenue Next 3Y3.25%
Revenue Next 5Y4.55%
EBIT growth 1Y17.59%
EBIT growth 3Y14.58%
EBIT growth 5Y14.92%
EBIT Next Year31.12%
EBIT Next 3Y18.11%
EBIT Next 5YN/A
FCF growth 1Y14.87%
FCF growth 3Y-12.01%
FCF growth 5Y10.3%
OCF growth 1Y12.42%
OCF growth 3Y-9.81%
OCF growth 5Y6.94%