AON Q4 Earnings Top Estimates, Revenue Miss

AON Plc. (AON) delivered solid fourth-quarter and full-year results characterized by robust organic growth. Earnings topped consensus estimates, but revenue fell short of analyst expectations. AON shares jumped 5.36% to close at $291.31 on February 4.

AON is a professional services company that offers financial risk mitigation products, including insurance and pension administration.

AON Earnings

Revenue in the fourth quarter was up 4% year-over-year to $3.1 billion, slightly missing consensus estimates of $3.15 billion. The increase was driven by a 10% growth in organic revenue. Full-year revenue was up 10% year-over-year to $12.2 billion, with organic revenue growth of 9%.

Net income attributable to shareholders was up 64% in the fourth quarter to $863 million. Adjusted earnings per share increased 42% year-over-year to $3.71, beating the consensus estimate of $3.32. Full-year EPS increased 22% to $12.

According to Chief Executive Officer Greg Case, the solid fourth-quarter and full-year results are a direct result of AON United’s strategy. Going forward, the focus is on accelerating innovation while developing and scaling proven solutions to new and existing clients.

AON repurchased 12.4 million Class A ordinary shares for about $3.5 billion during the year.

Stock Rating

Last month, Evercore ISI analyst David Motemaden downgraded AON stock to a Sell with a $292 price target, implying shares are almost fully priced at current levels. According to the analyst, the stock could underperform owing to the unique challenges presented over the past 18 months. The analyst is especially wary of elevated comparable expenses and pressure on organic growth.

Consensus among analysts is a Hold based on 4 Holds and 1 Sell. The average AON price target of $309.00 implies 6.07% upside potential to current levels.

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