Aon Earnings: Profit Drop Breaks Hot Streak

S&P 500 (NYSE:SPY) component Aon Corporation (NYSE:AON) reported its results for the first quarter. Aon provides risk management and human capital consulting services, including insurance and reinsurance brokerage and workforce productivity solutions.

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Aon Earnings Cheat Sheet for the First Quarter

Results: Net income for the insurance brokerage fell to $238 million (71 cents per share) vs. $246 million (71 cents per share) a year earlier. This is a decline of 3.3% from the year-earlier quarter.

Revenue: Rose 0.9% to $2.8 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Aon Corporation reported adjusted net income of 98 cents per share. By that measure, the company fell short of mean estimate of $1.06 per share. Analysts were expecting revenue of $2.84 billion.

Quoting Management: “Our first quarter results reflect the strongest rate of organic revenue growth since the second quarter of 2007 despite overall results that were unfavorably impacted by foreign currency movement and investments to strengthen our client-serving capabilities,” said Greg Case, president and chief executive officer.

“We have taken significant steps to position the firm for long-term growth, strong free cash flow generation and increased financial flexibility as highlighted by the completed redomestication to London, the authorization of a five billion dollar share repurchase program and a five percent increase in our dividend.”

Key Stats:

Last quarter’s profit decrease breaks a streak of four consecutive quarters of year-over-year profit increases. In the fourth quarter of the last fiscal year, net income rose 19.9% from the year earlier, while the figure increased 37.5% in the third quarter of the last fiscal year, 68.6% in the second quarter of the last fiscal year and 38.2% in the first quarter of the last fiscal year.

Revenue has risen the past four quarters. Revenue increased 3.2% to $3 billion in the fourth quarter of the last fiscal year. The figure rose 52.3% in the third quarter of the last fiscal year from the year earlier and climbed 46.5% in the second quarter of the last fiscal year from the year-ago quarter.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 97 cents versus a mean estimate of net income of 96 cents per share.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the second quarter has moved up from 87 cents a share to $1.10 over the last thirty days. For the fiscal year, the average estimate has moved up from $3.48 a share to $4.39 over the last sixty days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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