WILLIS TOWERS WATSON PLC (WTW): what the price requires
At today's price, WILLIS TOWERS WATSON PLC (WTW) is priced for +7.7% earnings growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/WTW
Headline
| Field | Value |
|---|---|
| Ticker | WTW |
| Company | WILLIS TOWERS WATSON PLC |
| Current price | $295.45/sh |
| Composition | Broking 45% / Consulting 34% / Outsourced Administration 12% / Other 7% / Reimbursable expenses and other 1% / Interest and other income 2% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | fee-financial |
| Implied earnings growth | 7.7% |
| Price-to-earnings | 26.4x |
| Earnings yield | 3.8% |
Solve inputs: computed at a 8.6% cost of equity with 4% terminal growth over a 5-year stage, on a 5-year median GAAP earnings base; each 1pp of cost of equity moves the implied earnings growth ~5.1pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +0.31σ |
| cohort percentile (of 49 peers) | 63 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by earnings-power and relative-multiple value, while asset-based lands below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.57x | 3 | expensive |
| Earnings | 1.07x | 2 | expensive |
| Relative | 0.50x | 3 | justifies |
| Growth | 1.49x | 1 | expensive |
Families that justify the price: Earnings, Relative Families that call it expensive: Asset
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.6%); the inversion above states its own rate.
Per-Model Detail (n=9)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $310.82 | 0.95x | yes | TBVPS $83.09 × 3.74x (ROE (TTM) 20.9% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption)) |
| Relative Valuation | Relative | $206.31 | 1.43x | yes | P/E 12.8x (blended: static sector reference 11x + trailing (TTM) 17x), scenarios: 10.8x / 12.8x / 14.8x (bear / base = reference held flat / bull), EV/EBITDA 10x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $187.73 | 1.57x | yes | BV/sh $83.09, ROE (TTM) 20.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $279.80 | 1.06x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $198.78 | 1.49x | yes | Rev $9.9B, growth 1% (input: historical growth; tapered), Terminal P/S: 2.4x / 2.9x / 3.3x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $596.05 | 0.50x | yes | EPS $17.03, growth 35% (input: historical EPS growth), PEG=0.49 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $178.44 | 1.66x | yes | √(22.5 × EPS $17.03 × BVPS $83.09) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $549.50 | 0.54x | yes | EPS $17.03 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | $638.63 | 0.46x | yes | EPS $17.03 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $184.11 | 1.60x | yes | EPS $17.03 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $7.8b |
| Net debt / NOPAT (after-tax) | 5.76x |
| Net debt / operating income (pre-tax) | 4.69x |
| Interest coverage | 6.1x |
| Share count CAGR (buyback) | -5.0% |
| Burning cash | no |
Bullet Takeaways
The earnings trajectory is the story: Q1 2026 adjusted diluted EPS climbed 19% to $3.72, beating consensus, with adjusted operating margin expanding to 22.3% as the broker keeps converting modest revenue growth into faster profit growth.
Willis Towers Watson is a capital-light fee business, an insurance broker and HR consultant, earning a return on equity near 21%. At $255 the price works out to about 23x earnings, implying fee-earnings growth of only about 4.6% a year, broadly in line with what it has delivered.
The model returns capital aggressively, shrinking the share count near 5% a year, and the priced-in assumption is within range. The catch is that the margin-expansion plan, not revenue, drives the EPS growth, so it depends on continued execution.
Bull Case
The direction of the margins and earnings is what makes the bull case, because Willis Towers Watson is turning modest top-line growth into much faster profit growth. Q1 2026 organic revenue grew 3% and reported revenue rose 8% to $2.41 billion, but adjusted diluted EPS climbed 19% to $3.72, ahead of the roughly $3.64 consensus, and adjusted operating margin expanded 0.7 points to 22.3%. That is operating leverage: a fee business spreading a largely fixed cost base over a growing revenue line, with technology investment driving efficiency. Management has laid out a path for roughly 100 basis points of annual margin expansion in the Risk & Broking segment over two years, with incremental gains in Health, Wealth & Career, so the EPS trajectory has a visible runway even at mid-single-digit revenue growth.
The business mix is durable and high-return. The composition spans broking, consulting, and outsourced administration, and the Risk & Broking segment grew revenue to $4.3 billion in 2025 from $4.0 billion in 2024 (FY2025 10-K, accession 0001193125-26-069307). Insurance broking is a fee-for-placement business that earns commissions on premiums without taking underwriting risk, and the HR consulting and benefits-administration lines are recurring and relationship-driven. The result is a return on equity near 21% against a cost of equity below 10%, with adjusted EBITDA margin reaching 24.4% in the quarter. Management is also pruning the portfolio, divesting businesses that are not a strategic fit to sharpen the financial profile (FY2025 10-K, accession 0001193125-26-069307).
Capital allocation amplifies the per-share story. The company has been shrinking its share count at roughly a 5% annual rate through buybacks, its share-repurchase authorization gives it standing flexibility (FY2025 10-K, accession 0001193125-26-069307), and the dividend rose 4.3% to a $0.96 quarterly rate at a comfortable 23% payout. Net debt of about $7.8 billion is well covered at 8.3x interest coverage. Against larger peers Marsh & McLennan and Aon, Willis Towers Watson trades at a lower multiple while delivering comparable margin expansion, which is why analysts carry an average target near $370, well above the current price, and point to AI-driven productivity as a further margin lever.
Bear Case
The fragile assumption baked into the price is that the margin-expansion plan keeps delivering, because that, not revenue growth, is what produces the EPS line. Organic revenue grew just 3% in the quarter, so the 19% EPS growth came overwhelmingly from margin expansion, buybacks, and acquisitions rather than from the underlying business growing faster. A plan that calls for 100 basis points of margin gain a year is finite: margins do not expand forever, and once the easy efficiency wins are banked, EPS growth converges toward the low-single-digit revenue growth unless the top line accelerates. The market reacted to the mixed quarter, and the stock fell on the report despite the EPS beat, a sign that investors are scrutinizing the quality and durability of the growth.
The revenue itself is exposed to forces the company does not control. As an insurance broker, Willis Towers Watson earns commissions tied to premium levels, and the filing warns that declines in premiums may significantly undermine profitability, and that the company does not determine the timing or extent of premium pricing changes (FY2025 10-K, accession 0001193125-26-069307). The property-and-casualty insurance market has been in a hard-pricing cycle that lifted broker revenues; if that cycle softens and premium rates fall, the organic growth that is already only mid-single-digit could slow further, and the margin plan would have to carry an even heavier load.
The balance sheet and the acquisition strategy add execution risk. Net debt of about $7.8 billion is manageable but real, and the company is using debt and cash to repay maturing notes and fund acquisitions (FY2025 10-K, accession 0001193125-26-069307). Bolt-on deals contribute to the gap between reported and organic growth, which means some of the headline growth is bought rather than earned, and integration carries its own risk. A quality broker priced for steady execution has limited room for a disappointment.
Valuation
An insurance broker is worth the fee earnings it throws off, not its book value, so the price reads off price-to-earnings. At $255.22 (June 28, 2026) against trailing EPS of about $17, the stock trades near 23x earnings, a 4.4% earnings yield. The bank-style return-on-book model lands near $311 because it credits the high 21% return on equity, the two-stage excess-return model near $280, and the simple excess-return model near $188. The relative-multiple model at an 11x insurance-sector P/E lands near $190, but that sector median understates a quality broker. The growth-extrapolation models (Peter Lynch, Ben Graham formula, PEG) print numbers above $500, but they assume the recent 25%-plus EPS growth persists, which is not a safe anchor. The blended X-ray estimate sits near $235.
Inverting the price gives a modest assumption. At about 23x earnings the price implies fee-earnings growth of roughly 4.6% a year, solved at an 8.7% cost of equity with 4% terminal growth on a five-year median earnings base, where each percentage point of cost moves the implied growth about five points. That implied pace is within what the company has delivered, which is why the overall characterization is within range. The price-to-earnings sits in the upper half of the fee-financial peer group, so the stock is not cheap relative to peers, but the assumption it embeds is not demanding.
The practical read is a high-return, capital-light broker trading at a full but not stretched multiple, where the upside depends on the margin-expansion plan and buybacks continuing to lift EPS faster than revenue grows. Analyst targets up to $370 assume that operating leverage persists; the reverse-DCF is more conservative and credits only the demonstrated trajectory.
Catalysts
The Q1 2026 report was the recent catalyst, and a mixed one: adjusted diluted EPS up 19% to $3.72 beat the roughly $3.64 consensus and adjusted operating margin expanded to 22.3%, but organic revenue growth of just 3% and a cautious read on the quarter sent the stock lower. The next earnings report is the key test of whether organic growth holds in the mid-single digits and whether the margin-expansion plan stays on its roughly 100-basis-point annual cadence, since EPS growth depends more on margins than on revenue.
The property-and-casualty premium cycle is the macro catalyst to watch. Broker revenues have benefited from firm insurance pricing; any softening would pressure organic growth and force the margin plan to carry more of the EPS load. Capital return is the steady positive: ongoing buybacks shrinking the share count near 5% a year and a dividend raised 4.3% to a $0.96 quarterly rate at a 23% payout. AI-driven productivity is an emerging margin lever that analysts cite. The chief risks to the timeline are a turn in the premium cycle, a deceleration in margin expansion as the easy efficiency gains are banked, and integration risk from the acquisitions that pad reported growth. Analyst targets near $370 imply meaningful upside if execution continues, while the reverse-DCF near the current price reflects the more conservative case.
Sources: WTW Q1 2026 8-K earnings release (SEC); Tickeron: WTW Q1 2026 margin expansion drives EPS beat; Life Insurance International: WTW profit climbs 27% in Q1 2026; Investing.com: WTW Q1 2026 mixed results, stock tumbles; Simply Wall St: WTW dividend history and growth.
Peer Cohorts (Per Segment, With Filing Citations)
Health, Wealth & Career (reported)
- AON (Aon plc)
- (no filing in the citation store)
- AJG (ARTHUR J. GALLAGHER & CO.)
- (no filing in the citation store)
- MRSH (Marsh & McLennan Companies, Inc.)
- (no filing in the citation store)
- BRO (BROWN & BROWN, INC.)
- (no filing in the citation store)
Risk & Broking (reported)
- AON (Aon plc)
- (no filing in the citation store)
- AJG (ARTHUR J. GALLAGHER & CO.)
- (no filing in the citation store)
- MRSH (Marsh & McLennan Companies, Inc.)
- (no filing in the citation store)
- BRO (BROWN & BROWN, INC.)
- (no filing in the citation store)
- RYAN (RYAN SPECIALTY HOLDINGS, INC.)
- (no filing in the citation store)
- GSHD (GOOSEHEAD INSURANCE, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.