AON PLC-CLASS A (AON) Stock Fundamental Analysis
NYSE:AON - New York Stock Exchange, Inc. - IE00BLP1HW54 - Common Stock - Currency: USD
Taking everything into account, AON scores 5 out of 10 in our fundamental rating. AON was compared to 143 industry peers in the Insurance industry. AON has an excellent profitability rating, but there are concerns on its financial health. AON is quite expensive at the moment. It does show a decent growth rate.
1. Profitability
1.1 Basic Checks
AON had positive earnings in the past year.
AON had a positive operating cash flow in the past year.
AON had positive earnings in each of the past 5 years.
Each year in the past 5 years AON had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 5.07%, AON belongs to the top of the industry, outperforming 88.81% of the companies in the same industry.
AON has a better Return On Equity (36.38%) than 99.30% of its industry peers.
Looking at the Return On Invested Capital, with a value of 12.01%, AON belongs to the top of the industry, outperforming 97.90% of the companies in the same industry.
AON had an Average Return On Invested Capital over the past 3 years of 20.44%. This is significantly above the industry average of 4.07%.
The last Return On Invested Capital (12.01%) for AON is well below the 3 year average (20.44%), which needs to be investigated, but indicates that AON had better years and this may not be a problem.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.07% | ||
| ROE | 36.38% | ||
| ROIC | 12.01% |
ROA(3y)6.96%
ROA(5y)6.19%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)20.44%
ROIC(5y)17.82%
1.3 Margins
With an excellent Profit Margin value of 15.58%, AON belongs to the best of the industry, outperforming 83.22% of the companies in the same industry.
AON's Profit Margin has improved in the last couple of years.
AON's Operating Margin of 25.74% is amongst the best of the industry. AON outperforms 91.61% of its industry peers.
AON's Operating Margin has improved in the last couple of years.
AON's Gross Margin of 47.12% is amongst the best of the industry. AON outperforms 94.41% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.74% | ||
| PM (TTM) | 15.58% | ||
| GM | 47.12% |
OM growth 3Y16.22%
OM growth 5Y2.49%
PM growth 3Y17.99%
PM growth 5Y3.98%
GM growth 3YN/A
GM growth 5YN/A
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), AON is creating value.
Compared to 1 year ago, AON has more shares outstanding
The number of shares outstanding for AON has been reduced compared to 5 years ago.
The debt/assets ratio for AON is higher compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 1.62, we must say that AON is in the distress zone and has some risk of bankruptcy.
AON has a better Altman-Z score (1.62) than 88.81% of its industry peers.
AON has a debt to FCF ratio of 6.68. This is a slightly negative value and a sign of low solvency as AON would need 6.68 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 6.68, AON is doing worse than 69.93% of the companies in the same industry.
AON has a Debt/Equity ratio of 2.52. This is a high value indicating a heavy dependency on external financing.
AON has a worse Debt to Equity ratio (2.52) than 92.31% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.52 | ||
| Debt/FCF | 6.68 | ||
| Altman-Z | 1.62 |
ROIC/WACC1.7
WACC7.07%
2.3 Liquidity
A Current Ratio of 1.05 indicates that AON should not have too much problems paying its short term obligations.
AON has a Current ratio of 1.05. This is in the better half of the industry: AON outperforms 79.72% of its industry peers.
A Quick Ratio of 1.05 indicates that AON should not have too much problems paying its short term obligations.
AON has a better Quick ratio (1.05) than 79.72% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.05 | ||
| Quick Ratio | 1.05 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 7.59% over the past year.
The Earnings Per Share has been growing by 11.42% on average over the past years. This is quite good.
Looking at the last year, AON shows a very strong growth in Revenue. The Revenue has grown by 20.49%.
The Revenue has been growing slightly by 7.35% on average over the past years.
EPS 1Y (TTM)7.59%
EPS 3Y9.38%
EPS 5Y11.42%
EPS Q2Q%0.18%
Revenue 1Y (TTM)20.49%
Revenue growth 3Y8.79%
Revenue growth 5Y7.35%
Sales Q2Q%16.19%
3.2 Future
AON is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 10.38% yearly.
The Revenue is expected to grow by 5.74% on average over the next years.
EPS Next Y8.18%
EPS Next 2Y10.34%
EPS Next 3Y10.25%
EPS Next 5Y10.38%
Revenue Next Year9.58%
Revenue Next 2Y7.97%
Revenue Next 3Y7.14%
Revenue Next 5Y5.74%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
AON is valuated rather expensively with a Price/Earnings ratio of 22.60.
67.83% of the companies in the same industry are cheaper than AON, based on the Price/Earnings ratio.
AON is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 26.55, which is the current average of the S&P500 Index.
Based on the Price/Forward Earnings ratio of 18.58, the valuation of AON can be described as rather expensive.
Based on the Price/Forward Earnings ratio, AON is valued a bit more expensive than 69.93% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.40. AON is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.6 | ||
| Fwd PE | 18.58 |
4.2 Price Multiples
AON's Enterprise Value to EBITDA ratio is in line with the industry average.
AON's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. AON is more expensive than 74.13% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 29.1 | ||
| EV/EBITDA | 15.21 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of AON may justify a higher PE ratio.
PEG (NY)2.76
PEG (5Y)1.98
EPS Next 2Y10.34%
EPS Next 3Y10.25%
5. Dividend
5.1 Amount
With a yearly dividend of 0.80%, AON is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 3.10, AON is paying slightly less dividend.
With a Dividend Yield of 0.80, AON pays less dividend than the S&P500 average, which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.8% |
5.2 History
The dividend of AON is nicely growing with an annual growth rate of 9.31%!
AON has been paying a dividend for at least 10 years, so it has a reliable track record.
AON has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
Dividend Growth(5Y)9.31%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
23.00% of the earnings are spent on dividend by AON. This is a low number and sustainable payout ratio.
AON's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept the dividend growth is sustainable.
DP23%
EPS Next 2Y10.34%
EPS Next 3Y10.25%
355.78
+6.3 (+1.8%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners89.27%
Inst Owner Change2.23%
Ins Owners1.07%
Ins Owner Change3.39%
Market Cap76.83B
Analysts70
Price Target406.78 (14.33%)
Short Float %2.38%
Short Ratio3.42
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.8% |
Yearly Dividend2.71
Dividend Growth(5Y)9.31%
DP23%
Div Incr Years5
Div Non Decr Years5
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-1.89%
Min EPS beat(2)-6.82%
Max EPS beat(2)3.03%
EPS beat(4)2
Avg EPS beat(4)-0.24%
Min EPS beat(4)-6.82%
Max EPS beat(4)8.73%
EPS beat(8)3
Avg EPS beat(8)-1.42%
EPS beat(12)6
Avg EPS beat(12)-0.64%
EPS beat(16)9
Avg EPS beat(16)1.54%
Revenue beat(2)0
Avg Revenue beat(2)-3%
Min Revenue beat(2)-3.71%
Max Revenue beat(2)-2.29%
Revenue beat(4)0
Avg Revenue beat(4)-1.63%
Min Revenue beat(4)-3.71%
Max Revenue beat(4)-0.27%
Revenue beat(8)1
Avg Revenue beat(8)-1.1%
Revenue beat(12)1
Avg Revenue beat(12)-1.44%
Revenue beat(16)3
Avg Revenue beat(16)-0.85%
PT rev (1m)-2%
PT rev (3m)0.55%
EPS NQ rev (1m)-0.04%
EPS NQ rev (3m)-1.43%
EPS NY rev (1m)-1.94%
EPS NY rev (3m)-2.05%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.12%
Revenue NY rev (1m)0.05%
Revenue NY rev (3m)-0.46%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 22.6 | ||
| Fwd PE | 18.58 | ||
| P/S | 4.7 | ||
| P/FCF | 29.1 | ||
| P/OCF | 26.81 | ||
| P/B | 10.97 | ||
| P/tB | N/A | ||
| EV/EBITDA | 15.21 |
EPS(TTM)15.74
EY4.42%
EPS(NY)19.15
Fwd EY5.38%
FCF(TTM)12.23
FCFY3.44%
OCF(TTM)13.27
OCFY3.73%
SpS75.75
BVpS32.43
TBVpS-72.05
PEG (NY)2.76
PEG (5Y)1.98
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.07% | ||
| ROE | 36.38% | ||
| ROCE | 15.61% | ||
| ROIC | 12.01% | ||
| ROICexc | 17.06% | ||
| ROICexgc | N/A | ||
| OM | 25.74% | ||
| PM (TTM) | 15.58% | ||
| GM | 47.12% | ||
| FCFM | 16.14% |
ROA(3y)6.96%
ROA(5y)6.19%
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)20.44%
ROIC(5y)17.82%
ROICexc(3y)47.15%
ROICexc(5y)39.19%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)26.44%
ROCE(5y)22.9%
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y-9.92%
ROICexc growth 5Y-6.94%
OM growth 3Y16.22%
OM growth 5Y2.49%
PM growth 3Y17.99%
PM growth 5Y3.98%
GM growth 3YN/A
GM growth 5YN/A
F-Score5
Asset Turnover0.33
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 2.52 | ||
| Debt/FCF | 6.68 | ||
| Debt/EBITDA | 3.47 | ||
| Cap/Depr | 25.95% | ||
| Cap/Sales | 1.38% | ||
| Interest Coverage | 5.04 | ||
| Cash Conversion | 56.4% | ||
| Profit Quality | 103.61% | ||
| Current Ratio | 1.05 | ||
| Quick Ratio | 1.05 | ||
| Altman-Z | 1.62 |
F-Score5
WACC7.07%
ROIC/WACC1.7
Cap/Depr(3y)68.15%
Cap/Depr(5y)56.12%
Cap/Sales(3y)1.61%
Cap/Sales(5y)1.45%
Profit Quality(3y)115.68%
Profit Quality(5y)128.84%
High Growth Momentum
Growth
EPS 1Y (TTM)7.59%
EPS 3Y9.38%
EPS 5Y11.42%
EPS Q2Q%0.18%
EPS Next Y8.18%
EPS Next 2Y10.34%
EPS Next 3Y10.25%
EPS Next 5Y10.38%
Revenue 1Y (TTM)20.49%
Revenue growth 3Y8.79%
Revenue growth 5Y7.35%
Sales Q2Q%16.19%
Revenue Next Year9.58%
Revenue Next 2Y7.97%
Revenue Next 3Y7.14%
Revenue Next 5Y5.74%
EBIT growth 1Y4.47%
EBIT growth 3Y26.43%
EBIT growth 5Y10.02%
EBIT Next Year18.69%
EBIT Next 3Y11.35%
EBIT Next 5Y7.11%
FCF growth 1Y-10.51%
FCF growth 3Y11.27%
FCF growth 5Y11.84%
OCF growth 1Y-10.41%
OCF growth 3Y11.63%
OCF growth 5Y10.59%