WTW

WTW is a durable, capital-light insurance broking and HR-consulting franchise whose headline FY2025 numbers understate the underlying business. As-reported revenue fell 2% to $9.71B, but that decline was driven almost entirely by the December 2024 sale of TRANZACT; on an organic basis revenue grew 5%, with strength in both segments per the MD&A. Likewise, the eye-popping +1737% jump in net income to $1.60B is an artifact of a depressed 2024 base that absorbed a ~$1.04B goodwill impairment and loss on the TRANZACT disposal. Stripping out the noise, the real story is a high-margin services business: operating margin expanded to 23.5% (income from operations of $2.23B, up from $627M) and net margin reached 16.9%, with ROE of 20.1%.

The capital-return profile is a core part of the bull case. Operating cash flow was $1.77B (+17.4%) against only $229M of capex, leaving roughly $1.5B of free cash flow. Management deployed $1.65B into buybacks (+83% YoY), shrinking the share count 5.2% to 94.5M, plus $358M of dividends. Cash and equivalents rose 66% to $3.13B, and leverage is manageable (long-term debt $5.76B; liabilities/equity 2.69x is typical for a fiduciary-fund-carrying broker). The accumulated deficit of -$296M is not a distress signal — it reflects cumulative distributions and buybacks exceeding retained GAAP earnings, consistent with the aggressive repurchase program.