NEW YORK (TheStreet) -- Willis Group Holdings (WSH)WSH was upgraded to "neutral" from "under perform" at Sterne Agee as the firm feels risk/reward for the insurance brokerage company is now more balanced.
Since Sterne Agee downgraded the company in October 2011, Willis Group Holdings has significantly under-performed the group, up just 20% versus the rest of the insurance brokers which are up 75%, Sterne Agee said.
Valuation at 9.9x forwards four quarter EBITDA is essentially in line with the group average and the firm feels EPS downside risk is more limited as the consensus is now closer to our forecasts.
Sterne Agee estimates Q1 $1.40 from $1.42; '14 $2.75 from $2.80; '15 $3.05 from $3.10.
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TheStreet Ratings team rates WILLIS GROUP HOLDINGS PLC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate WILLIS GROUP HOLDINGS PLC (WSH) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, impressive record of earnings per share growth, compelling growth in net income and increase in stock price during the past year. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 13.9%. Since the same quarter one year prior, revenues slightly increased by 5.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- WILLIS GROUP HOLDINGS PLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WILLIS GROUP HOLDINGS PLC turned its bottom line around by earning $2.05 versus -$2.61 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $2.05).
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Insurance industry and the overall market, WILLIS GROUP HOLDINGS PLC's return on equity exceeds that of both the industry average and the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Insurance industry average, but is greater than that of the S&P 500. The net income increased by 108.4% when compared to the same quarter one year prior, rising from -$805.00 million to $68.00 million.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: WSH Ratings Report