TW  Towers Watson & Co

Exchange

NYSE

Sector

Consumer Services

Industry

Professional Services

Market Cap.

8.54B

Vuru Grade

60.72/100

Current Price

$123.00
+0.00 (+0.00%)

Growth Price

$113.34
Overvalued by 7.86%

Stability Price

$84.66
Overvalued by 31.17%

Company Metrics

  • P/E 20.09
  • P/S 2.33
  • P/B 2.86
  • EPS 6.12
  • Cash ROIC 10.06%
  • Cash Ratio 0.74
  • Dividend 0.6 / N/A %
  • Avg. Vol. 692,452.00
  • Shares 69.43M
  • Market Cap. 8.54B

Company Description

Towers Watson & Co. operates as a global professional services company that helps organizations to improve performance through people, risk, and financial management. The company offers solutions in the areas of employee benefits, talent management, rewards, and risk and capital management. Its benefits solutions cover health and group benefits, mergers and acquisitions, retirement, and technology... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Towers Watson, Willis Merger in Doubt as Investors Balk
Wall Street Journal - Nov 18, 2015
Towers Watson & Co. failed to get enough investor support for its $18 billion merger with insurance broker Willis Group Holdings PLC, putting the proposed deal in jeopardy and prompting the company to postpone a shareholder meeting on the deal.
Towers Watson postpones Willis merger vote amid waning support - Pensions & Investments
Willis Weighs Increasing Offer for Towers Watson, Amid Opposition to Deal - Insurance Journal
Top insurance brokers: Willis Towers Watson PLC
Business Insurance - Jul 17, 2016
The $18 billion deal, which brought together London-based brokerage Willis Group Holdings P.L.C. and New York-based consulting firm Towers Watson & Co., was completed in January, but the combined organization is still going through the process of ...
Towers Watson Investors Seek Appraisal Of $18B Willis Deal
Law360 (subscription) - Mar 5, 2016
Law360, Wilmington (March 4, 2016, 9:44 PM EST) -- Institutional investors of the former Towers Watson & Co. have challenged the deal price of the $18 billion merger with Willis Group Holdings PLC that created Willis Towers Watson, with petitions in ...
More Companies Freezing Corporate Pension Plans - Wall Street Journal (blog)
Discovery Claims Roil $18B Towers Watson Appraisal Fight
Law360 (subscription) - Oct 26, 2016
Law360, Wilmington (October 26, 2016, 7:29 PM EDT) -- A stockholder petition for appraisal of shares withheld from the $18 billion Towers Watson & Co.-Willis Group merger has taken a sharply adversarial turn, with allegations of document destruction ...
Willis Towers Watson to acquire French aviation broker
Business Insurance - Feb 21, 2017
... its partnership with Gras Savoye, which owned 40% of OAAGC, and through its links with the aviation team at Willis. Willis Group Holdings P.L.
Willis Towers Watson Public Limited Company (WLTW) Position Cut by the Gateway ... - Petro Global News 24
Willis Towers Watson Makes Additional Senior Management Changes
Insurance Journal - Oct 27, 2016
Willis Towers Watson has announced additional leadership changes one day after confirming that Dominic Casserley, president and deputy CEO of Willis Towers Watson, will be leaving the firm at the end of the year. ... In addition, Joe Gunn, Northeast ...
Willis Towers Watson Bolsters Leadership Team to Deliver on Strategic Priorities - GlobeNewswire (press release)
Dominic Casserley to leave Willis Towers Watson - Insurance Age
Casserley to Leave Willis Towers Watson
Insurance Journal - Oct 26, 2016
Dominic Casserley, president and deputy CEO of Willis Towers Watson, will leave the company when his employment agreement ends on Dec. 31, 2016, the global advisory and broking company confirmed on Tuesday. Casserley took his present position in ...
Willis Towers Watson Confirms Departure of Dominic Casserley as President and ... - GlobeNewswire (press release)
Willis Towers Watson reveals revenue for business segments
Business Insurance - Jul 15, 2016
Benefits and human capital consulting make up the largest segment of Willis Towers Watson P.L.C.'s business, followed by corporate insurance broking, according to the firm's latest filing with the U.S.
Willis Towers Watson Reports First Quarter Earnings
GlobeNewswire (press release) - May 6, 2016
On January 4, 2016, the merger of Willis Group Holdings (Willis) and Towers Watson & Co. (Towers Watson) was completed.
Willis Towers Watson's (WLTW) CEO John Haley on Q1 2016 Results - Earnings ... - Seeking Alpha
Pay consultants under fire for poor advice - Telegraph.co.uk
Willis Towers Watson Reports Fourth Quarter and Full Year Results
Yahoo Finance - Feb 9, 2017
On January 4, 2016, the merger of Willis Group Holdings plc (Willis) and Towers Watson & Co. (Towers Watson) was completed.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for TW to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate TW's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$123.00 Current Price

$113.34 Growth Price (DCF)

Overvalued by 7.86%


Growth Rate Assumed by Market: 16.98%


Future Free Cash Flow Growth Rate: 13.9%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$84.66 Stability Price (EPV)

Overvalued by 31.17%


Discount Rate: 15.0%

$97.74 Book Price

Overvalued by 20.53%


Satisfactory Cash Return on Invested Capital over the past 5 years

TW has somewhat efficiently invested its financial resources in buildings, projects, and equipment. If CROIC is inconsistent, it's likely TW could be benefiting from a one-time event or has a mixed history of investing capital productively. Read the company's Annual Report to determine whether this can improve.

TW has created $10.06 of cash for every $100 invested.
Figures in USD. Fiscal year ends in June
20112012201320142015
Free Cash Flow 441.89M 157.44M 403.34M 335.27M 438.29M
divided by
Invested Capital 3.35B 3.74B 3.63B 3.74B 3.42B
Cash ROIC 13.20% 4.21% 11.11% 8.96% 12.81%

Growing Return on Equity over the past 5 years

TW has been growing returns with capital that shareholders have invested. This is a positive sign and demonstrates that both the business and management performance are improving over time.

TW has generated $10.96 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in June
20112012201320142015
Net Income 194.44M 260.48M 315.65M 366.31M 385.63M
divided by
Stockholders' Equity 2.59B 2.43B 2.72B 3.10B 2.93B
Return on Equity 7.50% 10.71% 11.59% 11.83% 13.15%

Excellent Business Performance over the past 10 years

TW has been able to maintain profitability in good times and bad. This could mean TW has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

TW has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in June
2006200720082009201020112012201320142015
Free Cash Flow 103.32M 100.83M 223.13M 164.98M -80.25M 441.89M 157.44M 403.34M 335.27M 438.29M

Good Balance Sheet

TW's Total Assets double Total Liabilities. Its financial position is adequate. Remember to check Shareholders' Equity to see if it's stable or growing. It's one of the best measures of whether a company is creating value for shareholders.
Figures in USD. Fiscal year ends in June
2006200720082009201020112012201320142015
Cash 165.35M 248.19M 124.63M 209.83M 651.48M 572.61M 518.62M 589.45M 850.61M 842.31M
Current Assets 493.65M 636.76M 557.49M 565.60M 1.45B 1.65B 1.76B 1.71B 1.81B 1.84B
Total Assets 1.24B 1.53B 1.72B 1.63B 4.57B 5.10B 5.36B 5.33B 5.63B 5.39B
Current Liabilities 296.34M 310.41M 385.25M 337.14M 965.61M 1.18B 1.10B 1.11B 1.03B 1.13B
Total Liabilities 591.60M 742.19M 731.58M 772.68M 2.62B 2.51B 2.92B 2.61B 2.53B 2.46B
Stockholder' Equity 648.76M 787.52M 984.40M 853.64M 1.96B 2.59B 2.43B 2.72B 3.10B 2.93B
Current Ratio 1.67 2.05 1.45 1.68 1.50 1.40 1.60 1.54 1.75 1.62
TL-to-TA 0.48 0.49 0.43 0.48 0.57 0.49 0.55 0.49 0.45 0.46

Consistent Reinvestment of Profits over the past 10 years

TW has consistently retained profits. This may put TW in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, TW can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in June
2006200720082009201020112012201320142015
Retained Earnings 242.60M 336.10M 474.96M 608.63M 711.57M 883.16M 1.12B 1.39B 1.72B 2.07B
Retained Earnings Growth - 38.54% 41.31% 28.14% 16.91% 24.11% 26.55% 24.77% 23.56% 19.92%

Competitive Industry over the past 10 years

TW is likely operating in an industry with medium to low barriers to entry. This may mean that TW doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that TW invests heavily in R&D and Sales, General & Administrative expenses.

Only $8.08 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in June
2006200720082009201020112012201320142015
Net Income 87.19M 116.28M 155.44M 146.46M 120.60M 194.44M 260.48M 315.65M 366.31M 385.63M
divided by
Revenue 1.27B 1.49B 1.76B 1.68B 2.39B 3.26B 3.42B 3.60B 3.48B 3.64B
Net Profit Margin 6.86% 7.82% 8.83% 8.74% 5.05% 5.97% 7.62% 8.78% 10.52% 10.58%

Varying Pricing Power over the past 10 years

TW has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. However, there is a substantial variation in their Gross Profit Margins from year-to-year, which indicates inconsistent performance. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$79.60 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in June
2006200720082009201020112012201320142015
Gross Profit 1.19B 581.01M 683.92M 1.58B 2.11B 2.87B 2.99B 3.18B 3.09B 3.24B
divided by
Revenue 1.27B 1.49B 1.76B 1.68B 2.39B 3.26B 3.42B 3.60B 3.48B 3.64B
Gross Margin 93.38% 39.09% 38.86% 94.29% 88.55% 88.02% 87.53% 88.51% 88.87% 88.86%

Medium Capital Intensity over the past 10 years

TW has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

47.24% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in June
2006200720082009201020112012201320142015
Capital Expenditure 65.80M 66.28M 60.60M 62.57M 45.38M 99.35M 158.62M 127.97M 120.82M 135.23M
divided by
Net Income 87.19M 116.28M 155.44M 146.46M 120.60M 194.44M 260.48M 315.65M 366.31M 385.63M
Capital Expenditure Ratio 75.47% 57.01% 38.98% 42.72% 37.63% 51.09% 60.90% 40.54% 32.98% 35.07%

Very Strong Dividend History over the past 10 years

TW has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests TW is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in June
2006200720082009201020112012201320142015
Dividend Paid 12.67M 12.72M 12.77M 12.79M 15.25M 21.60M 26.45M 48.15M 21.06M 41.80M
divided by
Shares Outstanding 43.30M 44.68M 44.38M 42.86M 59.37M 74.14M 72.54M 71.56M 70.96M 70.01M
Dividend Paid Per Share 0.29 0.28 0.29 0.30 0.26 0.29 0.36 0.67 0.30 0.60
Price at Year End 43.77 45.68 46.12 47.14 52.83 59.93 56.10 126.59 115.16 129.39
Dividend Yield 0.67% 0.62% 0.62% 0.63% 0.49% 0.49% 0.65% 0.53% 0.26% 0.46%

Strong History of Stock Buybacks over the past 10 years

TW has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in June
2006200720082009201020112012201320142015
Shares Outstanding 43.30M 44.68M 44.38M 42.86M 59.37M 74.14M 72.54M 71.56M 70.96M 70.01M
Stock Bought Back - -3.10% 0.68% 3.55% -27.81% -19.92% 2.20% 1.38% 0.85% 1.35%
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