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Willis Towers Watson (WTW)
NASDAQ:WTW

Willis Towers Watson (WTW) AI Stock Analysis

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Willis Towers Watson

(NASDAQ:WTW)

Rating:65Neutral
Price Target:
$331.00
▲(7.94%Upside)
Willis Towers Watson's strengths lie in its gross profit margins, cash flow generation, and positive earnings call highlighting organic growth and strategic wins. However, profitability challenges, valuation concerns, and external economic headwinds temper the overall outlook.
Positive Factors
Investment Opportunity
WTW is seen as an attractive investment opportunity because its shares are currently undervalued compared to peers, offering an entry point for investors.
Operational Performance
WTW's adjusted operating margin of 21.6% exceeded expectations, highlighting strong operational performance.
Strategic Growth
WTW is exploring expansion opportunities in the mid-market segment to enhance its business mix and improve its presence in the insurance value chain.
Negative Factors
Earnings Performance
WTW reported 1Q25 operating EPS of $3.13, which missed estimates, indicating weaker earnings performance.
Macro-Sensitive Business
Organic growth may lag peers given a relatively larger mix of more macro-sensitive businesses in its HWC segment.
Revenue Challenges
Revenue was slightly below consensus in both HWC and R&B segments, reflecting challenges in meeting sales expectations.

Willis Towers Watson (WTW) vs. SPDR S&P 500 ETF (SPY)

Willis Towers Watson Business Overview & Revenue Model

Company DescriptionWillis Towers Watson Public Limited Company operates as an advisory, broking, and solutions company worldwide. It operates through two segments, Health, Wealth and Career; and Risk and Broking. The company offers actuarial support, plan design, and administrative services for traditional pension and retirement savings plans; plan management consulting, broking, and administration services for health and group benefit programs; and benefits outsourcing services. It also provides advice, data, software, and products to address clients' total rewards and talent issues. In addition, the company offers risk advice, insurance brokerage, and consulting services in the areas of property and casualty, aerospace, construction, and marine. Further, it offers investment consulting and discretionary management services to insurance and reinsurance companies; insurance consulting and technology, risk and capital management, pricing and predictive modeling, financial and regulatory reporting, financial and capital modeling, merger and acquisition, outsourcing, and business management services; wholesale insurance broking services to retail and wholesale brokers; and underwriting and capital management, capital market, and advisory and brokerage services. Additionally, the company provides primary medical and ancillary benefit exchange, and outsourcing services to active employees and retirees in the group and individual markets, as well as delivers healthcare and reimbursement accounts, including health savings accounts, health reimbursement arrangements, flexible spending accounts, and other consumer-directed accounts. The company was formerly known as Willis Group Holdings Public Limited Company and changed its name to Willis Towers Watson Public Limited Company in January 2016. Willis Towers Watson Public Limited Company was founded in 1828 and is based in London, the United Kingdom.
How the Company Makes MoneyWillis Towers Watson makes money through a variety of revenue streams primarily centered on its advisory and broking services. The company earns fees and commissions from providing risk management and insurance brokerage services, which involve advising clients on insurance and reinsurance needs and facilitating the placement of insurance coverage. Additionally, WTW generates revenue from its human capital and benefits consulting services, where it offers advice on employee benefits, compensation, and talent management. Investment advisory services also contribute to WTW's earnings, as the company provides guidance on investment strategies and asset management. Significant partnerships with insurance carriers, multinational corporations, and other professional services firms further enhance WTW's ability to deliver comprehensive solutions to its clients.

Willis Towers Watson Earnings Call Summary

Earnings Call Date:Apr 24, 2025
(Q1-2025)
|
% Change Since: -5.56%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a balanced view with strong organic growth, margin expansion, and strategic wins highlighting the company's resilience. However, geopolitical and economic uncertainties pose challenges, particularly in the North America career business and free cash flow performance.
Q1-2025 Updates
Positive Updates
Strong Organic Growth
The company delivered 5% organic growth, aligning with expectations and supporting its trajectory towards full-year goals.
Adjusted Operating Margin Expansion
Achieved 100 basis points of adjusted operating margin expansion, reaching 21.6%, indicating improved operational efficiency.
Record EPS
Adjusted EPS reached $3.13, reflecting an 8% increase over the prior year, excluding the impact of the TRANZACT divestiture.
Successful Strategic Wins
Secured several key mandates, including a complex construction project in Europe and a major global airline mandate, demonstrating effective cross-selling and specialization strategies.
Technological Advancements
Introduction of Neuron, a digital trading platform, which enhances efficiency and value by connecting brokers and insurers in real-time.
Negative Updates
Geopolitical and Economic Headwinds
The heightened geopolitical uncertainty and economic volatility have created challenges, particularly affecting the North America career business and investments segment.
Free Cash Flow Challenges
Reported negative $86 million free cash flow for the quarter, a decrease of $50 million from the prior year, primarily due to the absence of cash collections related to TRANZACT.
Headwinds from Tariff and Trade Uncertainty
Concerns about global trade and tariff impacts have created risks, affecting certain industries unevenly, which may impact client advisory work.
Career Segment Sensitivity
Economic uncertainty has led to some clients deferring advisory work in the career segment, reflecting its sensitivity to macroeconomic conditions.
Company Guidance
During the Willis Towers Watson Public Limited Company's first quarter 2025 earnings call, guidance was provided indicating a 5% organic growth rate for the quarter, with an adjusted operating margin expansion of 100 basis points to 21.6% and an adjusted earnings per share (EPS) of $3.13. The company reiterated its confidence in achieving a full-year outlook of mid-single-digit organic growth, continued adjusted operating margin expansion, and EPS growth. The Health, Wealth, and Career (HWC) segment is expected to achieve mid-single-digit growth, despite some economic headwinds impacting certain areas. The Risk and Broking segment reported 7% revenue growth and is expected to maintain mid to high single-digit growth for the year. The company's free cash flow margin is anticipated to improve, with a focus on share repurchases and strategic M&A aligned with its growth objectives.

Willis Towers Watson Financial Statement Overview

Summary
Willis Towers Watson exhibits strengths in gross profit margins and cash flow generation. However, challenges in revenue growth and profitability, along with declining stockholder equity, present potential risks. The company should focus on improving revenue trajectories and managing costs to enhance financial health.
Income Statement
65
Positive
The company's TTM data shows a decline in revenue and a negative net income, indicating profitability challenges. Gross profit margin stands at 52.7%, which is robust. However, EBIT and EBITDA margins are declining, reflecting cost pressures. Revenue growth is negative compared to the previous annual period, highlighting a concerning trend.
Balance Sheet
70
Positive
The balance sheet displays moderate financial leverage with a debt-to-equity ratio of approximately 0.65, suggesting manageable debt levels. The equity ratio is 29%, which provides a cushion against liabilities. However, declining stockholder equity over time could pose risks if not addressed.
Cash Flow
72
Positive
The cash flow statement shows strong free cash flow generation, with a positive free cash flow to net income ratio despite net losses. Operating cash flow remains positive, indicating good cash management practices. However, fluctuations in cash flow due to financing activities could impact liquidity.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue9.81B9.93B9.48B8.87B9.00B9.35B
Gross Profit5.17B4.43B4.14B3.62B4.55B3.73B
EBITDA3.25B627.00M2.02B1.88B2.40B2.38B
Net Income-53.00M-98.00M1.05B1.01B2.16B996.00M
Balance Sheet
Total Assets28.06B27.68B29.09B31.77B34.97B38.53B
Cash, Cash Equivalents and Short-Term Investments1.51B1.89B1.42B1.26B4.69B2.09B
Total Debt5.93B5.93B5.94B5.47B5.47B6.71B
Total Liabilities19.85B19.66B19.50B21.68B21.66B27.60B
Stockholders Equity8.13B7.94B9.52B10.02B13.26B10.82B
Cash Flow
Free Cash Flow1.46B1.27B1.10B608.00M1.86B1.49B
Operating Cash Flow1.45B1.51B1.34B812.00M2.06B1.77B
Investing Cash Flow240.00M250.00M-1.08B-173.00M2.77B-160.00M
Financing Cash Flow-1.99B-459.00M-1.20B-3.44B-3.11B-434.00M

Willis Towers Watson Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price306.64
Price Trends
50DMA
306.14
Negative
100DMA
316.05
Negative
200DMA
310.73
Negative
Market Momentum
MACD
-0.91
Negative
RSI
50.74
Neutral
STOCH
84.13
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WTW, the sentiment is Neutral. The current price of 306.64 is above the 20-day moving average (MA) of 301.21, above the 50-day MA of 306.14, and below the 200-day MA of 310.73, indicating a neutral trend. The MACD of -0.91 indicates Negative momentum. The RSI at 50.74 is Neutral, neither overbought nor oversold. The STOCH value of 84.13 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WTW.

Willis Towers Watson Risk Analysis

Willis Towers Watson disclosed 39 risk factors in its most recent earnings report. Willis Towers Watson 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

Willis Towers Watson Peers Comparison

Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
BRBRO
76
Outperform
$35.42B30.3016.18%0.56%12.57%10.52%
72
Outperform
$15.98B29.4332.38%1.59%15.05%26.80%
AOAON
71
Outperform
$75.91B29.9674.17%0.85%19.57%-8.09%
AJAJG
71
Outperform
$80.86B48.579.27%0.82%14.07%31.44%
MMMMC
70
Outperform
$104.81B26.0930.51%1.53%7.56%3.39%
67
Neutral
$16.84B11.729.71%3.76%11.61%-9.60%
WTWTW
65
Neutral
$30.19B-0.60%1.21%2.42%-103.64%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
WTW
Willis Towers Watson
306.64
48.04
18.58%
AON
Aon
354.76
60.59
20.60%
AJG
Arthur J Gallagher & Co
318.10
55.52
21.14%
BRO
Brown & Brown
108.70
18.67
20.74%
ERIE
Erie Indemnity Company
346.94
-14.64
-4.05%
MMC
Marsh & Mclennan Companies
215.08
4.24
2.01%

Willis Towers Watson Corporate Events

Executive/Board ChangesShareholder Meetings
Willis Towers Watson Shareholders Approve AGM Proposals
Neutral
May 20, 2025

On May 15, 2025, Willis Towers Watson held its Annual General Meeting of Shareholders, where 91.86% of the company’s ordinary shares were represented. Shareholders approved all proposals, including the election of directors, ratification of auditors, executive compensation, and granting authority to the Board for share issuance and pre-emption rights under Irish law. Paul Thomas retired from the Board, with Paul Reilly succeeding him as the non-executive Chair.

The most recent analyst rating on (WTW) stock is a Buy with a $315.00 price target. To see the full list of analyst forecasts on Willis Towers Watson stock, see the WTW Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 02, 2025