Willis Group Downgraded - Analyst Blog
22 11월 2012 - 1:20AM
Zacks
We are downgrading Willis Group Holdings plc
(WSH) to Underperform from Neutral on the back of weak performance
in the third quarter. Operating earnings in the quarter fell short
of the Zacks Consensus Estimate as well as the year-ago
results. Lower revenue coupled with higher expenses weighed
on the performance. Top line also missed the expectation and was
lower than the year-ago numbers due to lower commissions and fees
and lower investment income.
The company has been experiencing a decline in investment income
over the past few years, a trend that continues into the third
quarter, due to lower average interest rates. We expect investment
income to remain under pressure in the near term as interest rates
have continued to experience sharp declines across the globe.
The Loan Protector business acquired through the Hilb Rogal and
Hobbs purchase has been experiencing a revenue dip since the second
quarter of 2011 due to client loss through attrition and merger and
acquisition activity, tightened commission and drag in foreclosure.
Willis, therefore, expected weak performance at the Loan Protector
business to adversely affect the North America segment, continuing
even into 2012.
However, these negatives are somewhat offset by organic growth in
commissions and fees driven by better performances in Global
operations and International operations. Alongside, Willis opts for
strategic acquisitions, which continue to aid its performances and
help it write more business going forward, thereby aiding top-line
growth.
Willis also remains focused on enhancing shareholders wealth. Its
dividend yield of 3.19% is much superior than the industry yield of
1.77% as well as that of its nearest peer, Aon plc
(AON), with a dividend yield of 1.12% and Marsh &
McLennan Companies Inc. (MMC), with a yield of
2.66%. Also, with shares repurchased in the third quarter,
the company exhausted its authorization.
Willis currently carries a Zacks #3 Rank, translating into a
short-term Hold rating. Arthur J Gallagher
&Co. (AJG), another competitor, and Marsh &
McLennan, share the same Zacks Rank.
GALLAGHER ARTHU (AJG): Free Stock Analysis Report
AON PLC (AON): Free Stock Analysis Report
MARSH &MCLENNAN (MMC): Free Stock Analysis Report
WILLIS GP HLDGS (WSH): Free Stock Analysis Report
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