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Aon’s Q3 Results Exceed Expectations

Aon plc (AON) has reported better-than-expected earnings and revenues for the third quarter of 2021. The global professional services firm provides financial risk-mitigation products, including insurance, pension administration and health insurance plans.

Adjusted earnings of $1.74 per share came ahead of the Street’s expectations of $1.70. The figure also compares favorably with earnings of $1.53 per share reported in the year-ago quarter.

Revenues climbed 13% year-over-year to $2.7 billion. Also, it surpassed the analyst’s expectations of $2.6 billion. Organic revenue growth during the quarter was 12%. (See Aon stock charts on TipRanks)

Segment-wise, Commercial Risk Solutions’ net sales increased 14%, as it benefitted from strong new business generation, retention and management of the renewal book portfolio. Health Solutions unit’s sales jumped 17% year-over-year due to the growth witnessed in Human Capital, driven by both rewards and assessments solutions. 

Aon repurchased 4.4 million common shares for about $1.3 billion in the third quarter. As of September 30, 2021, the company had approximately $3.7 billion of remaining authorization under its share repurchase program.

The CEO of Aon, Greg Case, said, “Our focus on unmet client needs related to new forms of volatility, workforce resiliency, and access to capital make us more relevant to current clients and more capable of addressing a broader marketplace, positioning Aon to deliver substantial ongoing value to clients and shareholders.”

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On November 1, Wells Fargo analyst Elyse Greenspan maintained a Buy rating on AON with a price target of $326 (1.9% downside potential from current levels).

Greenspan noted, “AON is positioned to show a pick up in organic revenue growth as we move through 2021 and should continue to improve its margins. Further, following pulling the Willis transaction, as the market gives the company credit for its stand-alone prospects the valuation gap with MMC should narrow.”

Overall, the Street has a Hold consensus rating based on 1 Buy and 5 Holds. The average Aon price target of $311.50 implies 2.6% downside potential from current levels.

TipRanks’ Stock Investors tool shows that investors currently have a Very Negative stance on Aon, with 5.1% of investors on TipRanks decreasing their exposure to AON stock over the past 30 days.

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