Investors braced for a bumpy ride ahead of Towers Watson's (NYSE: TW) earnings announcement as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings on Tuesday, August 16. Towers Watson is engaged in professional services company, which helps organizations improve performance through effective people, risk, and financial management.
What analysts say:
- Buy, sell, or hold?: Analysts strongly back Towers Watson, with five of eight rating it a buy and the remainder rating it a hold. Analysts like Towers Watson better than competitor Equifax overall. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared to three months ago.
- Revenue Forecasts: On average, analysts predict $812.1 million in revenue this quarter. That would represent a rise of 8.3% from the year-ago quarter.
- Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.90 per share. Estimates range from $0.89 to $0.92.
What our community says:
CAPS All Stars are solidly backing the stock, with 98.3% awarding it an "outperform" rating. The community at large backs the All Stars, with 93% granting it a rating of "outperform." Fools have embraced Towers Watson, though the message boards have been quiet lately with only 42 posts in the past 30 days. Even with a robust four out of five stars, Towers Watson's CAPS rating falls a little short of the community's upbeat outlook.
Management:
Towers Watson's profit has risen year over year by an average of more than threefold over the past five quarters. Revenue has now gone up for three straight quarters.
Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters:
|
Quarter |
Q3 |
Q2 |
Q1 |
Q4 |
|
Gross Margin |
89.1% |
87.8% |
87.6% |
86.9% |
|
Operating Margin |
11.8% |
7.8% |
7.9% |
3.2% |
|
Net Margin |
8.0% |
6.1% |
4.4% |
7.8% |
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