Will Aon plc (AON) Q4 Earnings Suffer from Forex Issues?

Aon plc AON is set to report fourth-quarter 2015 earnings results on Feb 5, before the market opens. Last quarter, the company posted a negative earnings surprise of 0.48%. Let us see how things are shaping up for this announcement.

Factors Affecting the Past Quarter

Aon's earnings during the quarter will see a drag from the unfavorable impact of foreign currency translation due to the strengthening of the U.S. dollar against most major currencies.

We expect weak earnings from its International segment, which might be affected by pricing and fragile market conditions in many countries across Europe and continued pressure in the Pacific region.

Aon's Reinsurance segment is also expected to disappoint due to unfavorable market conditions globally and a modest decline in facultative placements.

Earnings Whispers

Our proven model does not conclusively show that Aon is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP:   Aon has an ESP of -0.48%. This is because the Most Accurate estimate of $2.08 is a penny below the Zacks Consensus Estimate of $2.09 per share.

Zacks Rank: Aon has a Zacks Rank #3, which increases the predictive power of ESP. However, a negative ESP makes surprise prediction difficult.

Stocks to Consider

Here are some stocks from the finance sector which you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:  

Aspen Insurance Holdings Ltd. AHL with Earnings ESP of +7.97% and a Zacks Rank #3. The company is scheduled to release fourth-quarter earnings results on Feb 4.

PartnerRe Ltd. PRE with an Earnings ESP of +8.94% and a Zacks Rank #1. The company is scheduled to release fourth-quarter earnings results on Feb 8.

Arch Capital Group Ltd. ACGL with an Earnings ESP of +1.85% and a Zacks Rank #3. The company is scheduled to release fourth-quarter earnings results on Feb 9.

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