Higher margins, faster revenue growth
In our view, AON's recent restructuring is still under-appreciated by the market. Following the divestment of its HR BPO operations, we forecast faster revenue growth in 2018 driven by the enhanced business mix, recent acquisitions, rising global GDP and an improving pricing environment. In addition, planned cost savings should deliver substantial margin upside both this year and next. We believe that the pull-back in AON's share price in 4Q17 - due to uncertainty around tax reform and a weaker Q3 - has provided an excellent entry point for the stock. AON trades on 17x FY18 EPS and 15x FY19, below the market, and the FCF yield in FY19 is 7.5%. Given the attractive, compounding nature of AON's earnings, we believe that the stock is substantially undervalued and reiterate our Overweight rating.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.