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Aon Plc (AON)
NYSE:AON
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Aon
(NYSE:AON)
73Outperform
Positive Factors
Cost Reduction
The roll-off of Aon United+NFP Integration costs represents a nearly $500mm tailwind.
Organic Growth
Organic growth has improved: AON started off 2024 printing only 3% organic growth in Commercial Risk but has subsequently seen growth improve to 6% in each of the past two quarters.
Negative Factors
Operating Cash Flow
Aon's working capital impact on operating cash flows deteriorated and was negative for the first time since 2019.
Aon (AON) vs. S&P 500 (SPY)
Market Cap
$86.34B
Dividend Yield0.68%
Average Volume (3M)1.23M
Price to Earnings (P/E)31.9
Beta (1Y)0.40
Revenue Growth17.51%
EPS Growth1.31%
CountryUS
Employees60,000
SectorFinancial
Sector Strength77
IndustryInsurance
Share Statistics
EPS (TTM)12.66
Shares Outstanding216,001,100
10 Day Avg. Volume1,533,571
30 Day Avg. Volume1,234,243
Financial Highlights & Ratios
PEG Ratio24.40
Price to Book (P/B)N/A
Price to Sales (P/S)5.49
Price to Cash Flow (P/CF)18.00
P/FCF Ratio18.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$408.42Price Target Upside2.17% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
Aon Business Overview & Revenue Model
Company DescriptionLondon-based Aon Plc is a global professional services firm that provides a range of financial risk-mitigation products, including insurance, pension administration, and health-insurance plans to its clients. Its five principal products and service revenue lines include: Commercial Risk Solutions, Reinsurance Solutions, Retirement Solutions, Health Solutions, and Data and Analytic Services.
How the Company Makes MoneyAon makes money primarily through fees and commissions earned from its risk and insurance brokerage services, where it acts as an intermediary between clients and insurance carriers. The company also generates revenue from its consulting services in risk management, retirement, and health solutions, providing tailored advice and solutions to clients. Additionally, Aon derives income from its data and analytics services, which offer insights and tools to help clients make informed decisions about risk and benefit management. Partnerships with insurance companies and other financial institutions also play a significant role in Aon's revenue generation, as these relationships enable the company to offer a wide range of products and services to its clients.
Aon Financial Statement Overview
Summary
Aon's financial performance is marked by strong revenue and profit growth, supported by efficient cash generation. The company exhibits robust profitability margins but faces challenges with high leverage, impacting its balance sheet stability. Overall, Aon demonstrates a solid financial standing with some leverage-related risks that are mitigated by strong operational efficiency and cash flow management.Income Statement
Aon has demonstrated strong revenue growth over the years, with a significant increase from $11.01 billion in 2019 to $15.70 billion in 2024. The company maintains healthy gross and net profit margins, with a gross profit margin of 47.2% and a net profit margin of 16.9% in 2024. The EBIT and EBITDA margins are robust at 24.4% and 24.4% respectively, reflecting efficient operations. The company shows a consistent upward trend in profitability, signaling a strong competitive position in the insurance industry.88
Very Positive
Balance Sheet
Aon's balance sheet shows a high debt-to-equity ratio due to substantial total debt of $17.70 billion against a stockholders' equity of $6.12 billion in 2024. However, the company's ROE is strong at 43.4%, indicating efficient use of equity to generate profits. The equity ratio stands at 12.5%, suggesting a moderate level of financial leverage. The company's balance sheet stability is somewhat impacted by high leverage, but the strong ROE offsets some of this risk.72
Positive
Cash Flow
Aon has a healthy operating cash flow of $3.04 billion and a strong free cash flow of $2.82 billion in 2024. The operating cash flow to net income ratio is 1.14, and the free cash flow to net income ratio is 1.06, indicating efficient cash generation relative to net income. Although free cash flow growth has fluctuated, the company maintains a solid cash flow position, supporting its financial flexibility.81
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 15.70B | 13.38B | 12.48B | 12.19B | 11.07B | Gross Profit |
| 7.42B | 6.47B | 6.00B | 5.46B | 5.16B | EBIT |
| 3.83B | 3.79B | 3.67B | 2.09B | 2.78B | EBITDA |
| 4.94B | 3.91B | 3.81B | 2.44B | 3.21B | Net Income Common Stockholders |
| 2.65B | 2.56B | 2.59B | 1.25B | 1.97B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.30B | 1.15B | 1.14B | 836.00M | 1.19B | Total Assets |
| 48.97B | 33.96B | 32.70B | 31.93B | 32.11B | Total Debt |
| 17.70B | 12.03B | 11.46B | 10.16B | 8.63B | Net Debt |
| 16.62B | 11.25B | 10.77B | 9.62B | 7.74B | Total Liabilities |
| 42.53B | 34.70B | 33.13B | 30.77B | 28.52B | Stockholders Equity |
| 6.12B | -826.00M | -529.00M | 1.06B | 3.50B |
| Cash Flow | Free Cash Flow | |||
| 2.82B | 3.18B | 3.02B | 2.04B | 2.64B | Operating Cash Flow |
| 3.04B | 3.44B | 3.22B | 2.18B | 2.78B | Investing Cash Flow |
| -2.83B | -188.00M | -449.00M | 49.00M | -679.00M | Financing Cash Flow |
| 796.00M | -2.87B | -1.79B | -1.92B | -2.09B |
Aon Technical Analysis
Positive
399.74
Price Trends
378.06
Positive
374.37
Positive
346.25
Positive
Market Momentum
6.71
Positive
59.25
Neutral
32.99
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AON, the sentiment is Positive. The current price of 399.74 is above the 20-day moving average (MA) of 397.02, above the 50-day MA of 378.06, and above the 200-day MA of 346.25, indicating a bullish trend. The MACD of 6.71 indicates Positive momentum. The RSI at 59.25 is Neutral, neither overbought nor oversold. The STOCH value of 32.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AON.
Aon Risk Analysis
Aon disclosed 44 risk factors in its most recent earnings report. Aon reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Aon Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $82.97B | 49.51 | 9.46% | 0.74% | 15.21% | 46.99% | |
78 Outperform | $116.40B | 12.91 | 15.01% | 1.23% | 11.78% | 4.39% | |
77 Outperform | $33.73B | 34.63 | 16.35% | 0.47% | 12.89% | 13.50% | |
76 Outperform | $116.02B | 28.77 | 31.80% | 1.33% | 7.60% | 8.66% | |
73 Outperform | $86.34B | 31.95 | 100.25% | 0.68% | 17.51% | 1.31% | |
71 Outperform | $48.43B | 16.18 | 7.10% | 1.90% | -28.56% | 1.14% | |
64 Neutral | $13.80B | 10.64 | 9.23% | 4.22% | 17.66% | -7.66% |
* Financial Sector Average
Performance Comparison
AON
Aon
399.74
81.74
25.70%
CB
Chubb
290.70
36.34
14.29%
AIG
American International Group
81.63
7.33
9.87%
AJG
Arthur J Gallagher & Co
325.75
73.04
28.90%
BRO
Brown & Brown
117.96
32.55
38.11%
MMC
Marsh & Mclennan Companies
233.11
28.78
14.09%
Aon Earnings Call Summary
Earnings Call Date: Jan 31, 2025 | % Change Since: 7.61% | Next Earnings Date: Apr 25, 2025
Earnings Call Sentiment Positive
Aon's earnings call highlighted strong financial performance in 2024 and successful execution of strategic plans, despite facing external challenges like market volatility and FX headwinds. The company's solid outlook for 2025 further supports a positive sentiment.Highlights
Strong Fiscal Year 2024 Performance
Aon reported a 6% organic revenue growth and a total revenue increase of 17% for the full year 2024. Operating income grew by 17%, with a 10% increase in adjusted earnings per share and continued strong free cash flow.
Successful Execution of 3x3 Plan
Year one of Aon's 3x3 Plan led to winning more clients, expanding relationships, and improved client retention. The plan focuses on Risk Capital, Human Capital, Aon client leadership, and Aon Business Services.
Significant NFP Acquisition Impact
The acquisition of NFP expanded Aon's presence in the middle market, contributing $36 million in acquired EBITDA. The integration is on track, with strong producer retention and top-line growth.
Improvements in Client Leadership and Service Delivery
Aon's Enterprise Client Group showed 5 points of new business growth above the Aon average. The launch of advanced analytics tools like the Property Risk Analyzer and Cyber Risk Analyzer improved client experiences.
Continued Margin and Cash Flow Growth Expected
Aon expects mid-single-digit or greater organic revenue growth, margin expansion, strong adjusted EPS growth, and double-digit free cash flow growth in 2025.
Lowlights
Challenges from Market Volatility
Aon faces challenges from increasing market volatility and complexity, driven by mega trends in trade, technology, weather, and workforce, impacting client demand.
Lower Reinsurance Rate Impact
Reinsurance saw a modestly negative rate impact during the fourth quarter, which was offset by modest rate benefits in other areas.
FX and Interest Rate Headwinds
Aon anticipates an approximately $0.32 or 2-point EPS headwind from FX rates and a $110 million revenue impact in Q1 2025. Interest rate impacts on investment income from fiduciary balances are expected to dilute margins by 20 basis points.
Company Guidance
During Aon plc's Fourth Quarter 2024 conference call, CEO Greg Case provided guidance for the company's future, emphasizing the strong performance and strategic execution in 2024, which marked the first year of their 3x3 Plan. The company achieved 6% organic revenue growth and 17% total revenue growth, with a 17% increase in operating income and a 10% rise in adjusted earnings per share. Aon aims to maintain mid-single-digit or greater organic revenue growth, continue margin expansion in line with historical performance, and achieve strong adjusted EPS and double-digit free cash flow growth in 2025. The company highlighted progress across Risk Capital and Human Capital, client leadership models, and Aon Business Services, with plans to continue investing in growth areas and new technology-driven solutions.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.