WTW Outperforms Industry, Trades at a Discount: How to Play the Stock

Core Insights - Shares of Willis Towers Watson Public Limited Company (WTW) have increased by 18.7% over the past year, outperforming the industry and the Zacks S&P 500 composite, which grew by 10.2% and 12.3% respectively, but underperformed the Finance sector's return of 21.5% [1] - The company has a market capitalization of $30.27 billion, with an average trading volume of 0.7 million shares over the last three months [1] Financial Performance - WTW has consistently surpassed earnings estimates in the last four quarters, with an average beat of 15.99% [2] - The average target price for WTW shares is $364.71, suggesting an upside potential of 18.9% from the last closing price [9] - The Zacks Consensus Estimate for WTW's 2026 earnings per share and revenues indicates increases of 14.1% and 5.3% respectively from 2025 estimates [4] Valuation Metrics - WTW shares are currently trading at a price to forward 12-month earnings ratio of 17.17X, which is lower than the industry average of 21.58X, presenting a better entry point for investors [3] Growth Strategy - The company focuses on high-return core opportunities in Risk & Broking and Individual Marketplace, which are expected to drive long-term growth and shareholder value [12] - Strategic acquisitions have expanded WTW's global footprint and enhanced its product portfolio, contributing to revenue growth across most operating regions for 15 consecutive quarters [13][14] Shareholder Returns - WTW has a solid capital position, allowing it to distribute wealth to shareholders through dividend hikes and share repurchases, with a projected share repurchase total of approximately $1.5 billion in 2025 [15] Operational Challenges - Despite growth potential, WTW has faced rising expenses, including higher salaries and benefits, which have led to margin contraction [16] - The trailing 12-month return on equity (ROE) for WTW is 20.5%, which is below the industry average of 27.3%, indicating inefficiency in utilizing shareholders' funds [17]