Towers Watson & Co. Earnings:Here’s Why Investors are Ambivalent Now

Towers Watson & Co. (NYSE:TW) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company.

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Towers Watson & Co. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 15.11% to $1.6 in the quarter versus EPS of $1.39 in the year-earlier quarter.

Revenue: Rose 4.38% to $941 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Towers Watson & Co. reported adjusted EPS income of $1.6 per share. By that measure, the company beat the mean analyst estimate of $1.49. It missed the average revenue estimate of $951.05 million.

Quoting Management: “Our third quarter results were strong and I continue to be impressed with the efforts of our associates working in this challenging global environment,” said John Haley, chief executive officer. “The success we’ve had is in large part due to their consideration of our clients’ needs as we continue to bring innovative ideas to the market with a disciplined financial approach. This quarter also marked a milestone for our Exchange Solutions segment. The seasonal enrollment costs were reduced as part of our normal business cycle as the revenues from the 2013 enrollment season began to be recognized, resulting in a very profitable quarter.”

Key Stats (on next page)…

Revenue decreased 0.55% from $946.25 million in the previous quarter. EPS increased 8.11% from $1.48 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $1.34 to a profit $1.27. For the current year, the average estimate has moved up from a profit of $5.18 to a profit of $5.37 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)