WTW Stock Trading at a Discount to Industry at 14.57X: Time to Hold?

Willis Towers Watson Public Limited Company WTW shares are trading at a discount compared with the Zacks Insurance – Brokerage industry. Its forward price-to-earnings multiple of 14.57X is lower than the industry average of 15.13X, the Finance sector’s 15.03X and the Zacks S&P 500 composite’s 20.83X.

The insurer has a market capitalization of $28.09 billion. The average volume of shares traded in the last three months was 0.7 million. The insurer’s earnings have a solid track record of beating estimates in three of the last four quarters and missing in one, with an average of 2.65%.

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Shares of other insurers like Aon plc. AON and Arthur J. Gallagher & Co. AJG are trading at a multiple higher than the industry average, while Brown & Brown, Inc. BRO is trading at a discount.

WTW Price Performance

Shares of Willis Towers Watson have lost 13.2% in the past year compared with the industry’s decline of 43.3%.

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WTW’s Growth Projection Encourages

The Zacks Consensus Estimate for Willis Towers Watson's 2026 earnings per share indicates a year-over-year increase of 14.4%. The consensus estimate for 2026 revenues is pegged at $10.44 billion, implying a year-over-year improvement of 7.5%.

The consensus estimate for 2027 earnings per share and revenues indicates an increase of 13.1% and 5.7%, respectively, from the corresponding 2026 estimates.

Optimistic Analyst Sentiment on WTW

Eight of the 10 analysts covering the stock have raised estimates for 2026 and three of the eight analysts for 2027 over the past 60 days. Thus, the Zacks Consensus Estimate for 2026 and 2027 moved 1.6% and 0.9% north, respectively, in the last 60 days.

WTW’s Favorable Return on Capital

Willis Towers Watson’s return on equity (ROE) of 20.9% for the trailing 12 months compared favorably with the industry’s 19.1%, reflecting the company’s efficiency in utilizing shareholders’ funds. This insurer targets mid-teens ROE over the long term.

Average Target Price for WTW Suggests Upside

Based on short-term price targets offered by 19 analysts, the Zacks average price target is $369.63 per share. The average suggests a potential 26.91% upside from the last closing price.

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Factors Impacting WTW

Willis Towers’ growth strategy encompasses a focus on improving operating margins, increasing free cash flow conversion and driving sustainable revenue growth. Focus on core opportunities with the highest growth and return, which include gaining market share in Risk and Broking and Individual Marketplace, should spur long-term growth and return more value to shareholders.

Well-performing Health, Wealth & Career and Risk & Broking segments, driven by solid customer retention levels, growing new business and geographic diversification, continue to fuel the top line. Most of the company's operating regions experienced revenue growth for 16 straight quarters.

Strategic acquisitions have expanded its geographical footprint in the last few years in countries like Italy, Canada, the United Kingdom and France, as well as ramped up its product portfolio.

Willis Towers has been improving its liquidity while maintaining a solid balance sheet. A solid balance sheet and steady cash flow are expected to help the company engage in capital deployment for buybacks, dividend payouts, debt repayments, acquisitions and investments that drive and support growth.

Distribution of Wealth

Willis Towers remains committed to distributing wealth to its shareholders' value. With a 2.4% hike in dividend in February 2024, the dividend witnessed a five-year CAGR (2019-2024) of 6.2%. For 2025, WTW returned $2 billion in capital to shareholders. WTW expects to allocate at least $1 billion to share repurchases in 2026, subject to market conditions and potential capital allocation to organic and inorganic investment opportunities.

End Notes

Willis Towers boasts a strong product portfolio and has a solid track record of strategic acquisitions, as well as favorable growth estimates. The Health, Wealth & Career and Risk & Broking segments should continue to witness significant growth from increases in most lines of business. A robust capital position over the years reflects its financial flexibility.

Its solid growth projections as well as attractive valuations are other positives. Optimistic analyst sentiment and favorable ROE should continue to benefit Willis Towers over the long term. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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