How Aon plc (NYSE:AON) Could Add Value To Your Portfolio

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Aon plc (NYSE:AON) is a company with exceptional fundamental characteristics. Upon building up an investment case for a stock, we should look at various aspects. In the case of AON, it is a financially-healthy company with an impressive track record and a excellent future outlook. In the following section, I expand a bit more on these key aspects. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on Aon here.

Reasonable growth potential with proven track record and pays a dividend

Investors in search for stocks with room to flourish should look no further than AON, with its expected earnings growth of 24% underlying the notable 48% return on equity over the next few years leading up to 2022. In the previous year, AON has ramped up its bottom line by 54%, with its latest earnings level surpassing its average level over the last five years. Not only did AON outperformed its past performance, its growth also surpassed the Insurance industry expansion, which generated a 6.6% earnings growth. This paints a buoyant picture for the company.

NYSE:AON Past and Future Earnings, May 26th 2019
NYSE:AON Past and Future Earnings, May 26th 2019

AON’s strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This suggests prudent control over cash and cost by management, which is a crucial insight into the health of the company. AON appears to have made good use of debt, producing operating cash levels of 0.21x total debt in the prior year. This is a strong indication that debt is reasonably met with cash generated.

NYSE:AON Historical Debt, May 26th 2019
NYSE:AON Historical Debt, May 26th 2019

Next Steps:

For Aon, there are three essential factors you should look at:

  1. Valuation: What is AON worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether AON is currently mispriced by the market.
  2. Dividend Income vs Capital Gains: Does AON return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from AON as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of AON? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.