Aon plc
Aon plc Quality Analysis
Aon (AON) is a good quality business scoring 72/100, with particular strength in earnings predictability and capital allocation. The business has solid fundamentals but falls short of elite quality on some measures.
Does Aon have a strong competitive moat?
Aon shows a solid competitive position with decent competitive positioning. However, some vulnerability to competitive pressure suggests the moat, while present, may face challenges. The business earns above-average returns but lacks the exceptional durability of the strongest moats.
Does Aon have pricing power in its industry?
Aon demonstrates moderate pricing power. The company maintains healthy margins and has been able to grow revenue without significant margin compression. Encouragingly, margins have been expanding. This suggests reasonable, though not exceptional, ability to pass costs through to customers.
How predictable is Aon's business?
Aon is a highly predictable business with remarkably consistent financial performance. Revenue growth has been steady with low volatility, and the company has delivered positive free cash flow in 8 of the last 8 years. This consistency makes future earnings relatively easy to forecast with confidence.
Is Aon financially strong?
Aon has a moderate financial position. The debt-to-equity ratio of 2.11x warrants monitoring. The balance sheet could face stress in an economic downturn. Management should prioritize debt reduction to strengthen the company's resilience.
How effective is Aon's capital allocation strategy?
Aon demonstrates excellent capital allocation, averaging 19.6% return on capital while reducing shares outstanding through buybacks. Management deploys capital at rates well above the cost of capital, creating significant value for shareholders.
The allocation between reinvestment, buybacks, and dividends appears disciplined and shareholder-friendly.
Does Aon have high-quality management?
Aon has competent management that delivers acceptable results. Returns on capital are reasonable and operations run efficiently. While not exceptional, the management team maintains a steady hand and does not appear to be making value-destructive decisions.
Is Aon a quality company?
Aon plc is a good quality company with a quality score of 72/100
Predicted probability of operating margin improvement over the next 12 months
- Predictability is the strongest dimension at 92/100.
- Financial strength is the weakest area at 49/100 and needs attention.
- Average gross margin of 24.9% over 5 years.
- Positive free cash flow in 8 of the last 8 years.
- Debt-to-equity ratio of 2.11x.
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What is the fair value of Aon stock?
Is Aon a good investment at $321?
The following analysis is provided for informational and educational purposes only. It does not constitute financial advice, investment advice, or a recommendation to buy or sell any security. The opinions expressed are based on publicly available information and historical data. Beanvest and its contributors may hold positions in the securities mentioned. Investors should conduct their own due diligence or consult a licensed financial advisor before making any investment decision.