Q2 snap: excellent revenue, disappointing margin
AON delivered Q2 operating EPS of $1.71, 4% above consensus. The highlights were the strong organic revenue growth of 5% overall with 6% growth in Commercial Risk, 8 % in Reinsurance and 7% in Health. On the negative side, margin expansion of 130bp was below our expectations with management pointing to modest headwinds from FX and recent M&A. Margin expansion was considerably stronger in Q1 (+230bp) so this is likely to be a focus on the call. The effective tax rate of 14.7% was also considerably lower than our 19% forecast and without this tax boost EPS would have been in line. So overall we are very positive on the revenue line but disappointed by the margin.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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