Willis Towers Watson is scored 64 for moat and 76 for management. The management score rests on a return on invested capital of 11.5% and a gross margin of 42.1% — figures that describe a business earning a respectable return on what it employs. Debt sits at 0.87x equity.
Three independent anchors set the price worth paying. Growth is modelled at 2.4% a year, the rate measured from the filings. The exit multiple assumed is 8.0x. That produces an intrinsic value of $40.83, a 10-CAP price of $187.60 and a payback time price of $167.36, with the value zone set at the highest of the three, $187.60. Today's price of $291.60 is 55% above it.
The operating figures describe a business performing at a high level; the price asks for that performance to continue and then some. A margin of safety score of 7 is the measure of how little room that leaves for being wrong.
| Price | $291.60 |
| Market cap | $27.1B |
| P/E ratio | 17.9x |
| Return on invested capital | 11.5% |
| Gross margin | 42.1% |
| Debt to equity | 0.87x |
| Free cash flow yield | 4.8% |
| Growth rate used | 2.4% |
| Growth rate measured | 2.0% |
| Exit multiple assumed | 8.0x |
| Company | Moat | Buy price |
| Brown & Brown (BRO) | 95 | $69.93 |
| Ryan Specialty Holdings Inc (RYAN) | 77 | $61.93 |
| Goosehead Insurance Inc -A (GSHD) | 75 | $36.47 |
| Aon (AON) | 81 | $188.37 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Willis Towers Watson rather than accepting ours.