Intrinsic value of Aon - AON

Previous Close

$142.82

  Intrinsic Value

$105.00

stock screener

  Rating & Target

sell

-26%

Previous close

$142.82

 
Intrinsic value

$105.00

 
Up/down potential

-26%

 
Rating

sell

We calculate the intrinsic value of AON stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 37.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.30
  6.17
  6.05
  5.95
  5.85
  5.77
  5.69
  5.62
  5.56
  5.50
  5.45
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
  5.08
  5.07
  5.06
Revenue, $m
  10,628
  11,284
  11,967
  12,678
  13,420
  14,194
  15,002
  15,846
  16,727
  17,647
  18,610
  19,616
  20,669
  21,770
  22,924
  24,131
  25,396
  26,721
  28,109
  29,564
  31,089
  32,687
  34,364
  36,121
  37,965
  39,899
  41,927
  44,055
  46,288
  48,630
Variable operating expenses, $m
  8,715
  9,191
  9,686
  10,202
  10,740
  11,301
  11,887
  12,498
  13,137
  13,805
  13,493
  14,223
  14,986
  15,785
  16,621
  17,497
  18,414
  19,374
  20,381
  21,436
  22,541
  23,701
  24,916
  26,191
  27,527
  28,929
  30,400
  31,943
  33,562
  35,261
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  8,715
  9,191
  9,686
  10,202
  10,740
  11,301
  11,887
  12,498
  13,137
  13,805
  13,493
  14,223
  14,986
  15,785
  16,621
  17,497
  18,414
  19,374
  20,381
  21,436
  22,541
  23,701
  24,916
  26,191
  27,527
  28,929
  30,400
  31,943
  33,562
  35,261
Operating income, $m
  1,913
  2,093
  2,281
  2,477
  2,681
  2,893
  3,115
  3,347
  3,590
  3,843
  5,116
  5,393
  5,682
  5,985
  6,302
  6,634
  6,982
  7,346
  7,728
  8,128
  8,547
  8,987
  9,448
  9,931
  10,438
  10,969
  11,527
  12,112
  12,726
  13,370
EBITDA, $m
  4,011
  4,259
  4,517
  4,785
  5,065
  5,357
  5,662
  5,981
  6,313
  6,661
  7,024
  7,404
  7,801
  8,217
  8,652
  9,108
  9,585
  10,085
  10,609
  11,158
  11,734
  12,337
  12,970
  13,633
  14,329
  15,059
  15,825
  16,628
  17,470
  18,355
Interest expense (income), $m
  0
  322
  396
  472
  551
  634
  720
  810
  904
  1,002
  1,104
  1,211
  1,323
  1,440
  1,562
  1,690
  1,824
  1,964
  2,111
  2,265
  2,427
  2,596
  2,773
  2,958
  3,153
  3,357
  3,572
  3,796
  4,032
  4,279
  4,538
Earnings before tax, $m
  1,591
  1,697
  1,809
  1,925
  2,047
  2,173
  2,305
  2,444
  2,588
  2,738
  3,905
  4,070
  4,243
  4,423
  4,612
  4,810
  5,018
  5,235
  5,463
  5,701
  5,952
  6,214
  6,489
  6,778
  7,080
  7,398
  7,731
  8,080
  8,447
  8,831
Tax expense, $m
  429
  458
  488
  520
  553
  587
  622
  660
  699
  739
  1,054
  1,099
  1,146
  1,194
  1,245
  1,299
  1,355
  1,413
  1,475
  1,539
  1,607
  1,678
  1,752
  1,830
  1,912
  1,997
  2,087
  2,182
  2,281
  2,385
Net income, $m
  1,161
  1,239
  1,321
  1,406
  1,494
  1,587
  1,683
  1,784
  1,889
  1,999
  2,851
  2,971
  3,097
  3,229
  3,367
  3,512
  3,663
  3,822
  3,988
  4,162
  4,345
  4,536
  4,737
  4,948
  5,169
  5,400
  5,643
  5,899
  6,166
  6,447

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  27,749
  29,461
  31,244
  33,103
  35,040
  37,061
  39,170
  41,372
  43,673
  46,076
  48,589
  51,216
  53,965
  56,842
  59,853
  63,006
  66,308
  69,767
  73,392
  77,190
  81,172
  85,346
  89,722
  94,312
  99,125
  104,174
  109,470
  115,026
  120,856
  126,973
Adjusted assets (=assets-cash), $m
  27,749
  29,461
  31,244
  33,103
  35,040
  37,061
  39,170
  41,372
  43,673
  46,076
  48,589
  51,216
  53,965
  56,842
  59,853
  63,006
  66,308
  69,767
  73,392
  77,190
  81,172
  85,346
  89,722
  94,312
  99,125
  104,174
  109,470
  115,026
  120,856
  126,973
Revenue / Adjusted assets
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
  0.383
Average production assets, $m
  10,894
  11,566
  12,266
  12,995
  13,756
  14,549
  15,377
  16,242
  17,145
  18,088
  19,075
  20,106
  21,185
  22,315
  23,497
  24,735
  26,031
  27,389
  28,812
  30,303
  31,866
  33,505
  35,223
  37,024
  38,914
  40,896
  42,975
  45,156
  47,445
  49,846
Working capital, $m
  -2,083
  -2,212
  -2,345
  -2,485
  -2,630
  -2,782
  -2,940
  -3,106
  -3,278
  -3,459
  -3,647
  -3,845
  -4,051
  -4,267
  -4,493
  -4,730
  -4,978
  -5,237
  -5,509
  -5,795
  -6,093
  -6,407
  -6,735
  -7,080
  -7,441
  -7,820
  -8,218
  -8,635
  -9,072
  -9,532
Total debt, $m
  7,326
  8,737
  10,206
  11,738
  13,334
  14,999
  16,737
  18,552
  20,447
  22,428
  24,498
  26,663
  28,928
  31,299
  33,780
  36,378
  39,099
  41,949
  44,936
  48,066
  51,346
  54,786
  58,392
  62,174
  66,140
  70,300
  74,664
  79,243
  84,046
  89,086
Total liabilities, $m
  22,865
  24,276
  25,745
  27,277
  28,873
  30,538
  32,276
  34,091
  35,986
  37,967
  40,037
  42,202
  44,467
  46,838
  49,319
  51,917
  54,638
  57,488
  60,475
  63,605
  66,885
  70,325
  73,931
  77,713
  81,679
  85,839
  90,203
  94,782
  99,585
  104,625
Total equity, $m
  4,884
  5,185
  5,499
  5,826
  6,167
  6,523
  6,894
  7,282
  7,686
  8,109
  8,552
  9,014
  9,498
  10,004
  10,534
  11,089
  11,670
  12,279
  12,917
  13,585
  14,286
  15,021
  15,791
  16,599
  17,446
  18,335
  19,267
  20,245
  21,271
  22,347
Total liabilities and equity, $m
  27,749
  29,461
  31,244
  33,103
  35,040
  37,061
  39,170
  41,373
  43,672
  46,076
  48,589
  51,216
  53,965
  56,842
  59,853
  63,006
  66,308
  69,767
  73,392
  77,190
  81,171
  85,346
  89,722
  94,312
  99,125
  104,174
  109,470
  115,027
  120,856
  126,972
Debt-to-equity ratio
  1.500
  1.680
  1.860
  2.010
  2.160
  2.300
  2.430
  2.550
  2.660
  2.770
  2.860
  2.960
  3.050
  3.130
  3.210
  3.280
  3.350
  3.420
  3.480
  3.540
  3.590
  3.650
  3.700
  3.750
  3.790
  3.830
  3.880
  3.910
  3.950
  3.990
Adjusted equity ratio
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176
  0.176

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,161
  1,239
  1,321
  1,406
  1,494
  1,587
  1,683
  1,784
  1,889
  1,999
  2,851
  2,971
  3,097
  3,229
  3,367
  3,512
  3,663
  3,822
  3,988
  4,162
  4,345
  4,536
  4,737
  4,948
  5,169
  5,400
  5,643
  5,899
  6,166
  6,447
Depreciation, amort., depletion, $m
  2,098
  2,166
  2,236
  2,309
  2,385
  2,464
  2,547
  2,633
  2,724
  2,818
  1,907
  2,011
  2,119
  2,231
  2,350
  2,473
  2,603
  2,739
  2,881
  3,030
  3,187
  3,350
  3,522
  3,702
  3,891
  4,090
  4,298
  4,516
  4,744
  4,985
Funds from operations, $m
  3,260
  3,405
  3,556
  3,714
  3,879
  4,051
  4,230
  4,417
  4,613
  4,817
  4,758
  4,982
  5,216
  5,460
  5,717
  5,985
  6,266
  6,560
  6,869
  7,192
  7,531
  7,887
  8,259
  8,650
  9,060
  9,490
  9,941
  10,414
  10,911
  11,432
Change in working capital, $m
  -123
  -129
  -134
  -140
  -145
  -152
  -158
  -165
  -173
  -180
  -189
  -197
  -206
  -216
  -226
  -237
  -248
  -260
  -272
  -285
  -299
  -313
  -329
  -345
  -361
  -379
  -398
  -417
  -438
  -459
Cash from operations, $m
  3,383
  3,533
  3,690
  3,854
  4,024
  4,202
  4,388
  4,582
  4,785
  4,997
  4,947
  5,179
  5,422
  5,676
  5,943
  6,222
  6,514
  6,820
  7,141
  7,477
  7,830
  8,200
  8,588
  8,995
  9,421
  9,869
  10,339
  10,831
  11,348
  11,891
Maintenance CAPEX, $m
  -1,025
  -1,089
  -1,157
  -1,227
  -1,300
  -1,376
  -1,455
  -1,538
  -1,624
  -1,714
  -1,809
  -1,907
  -2,011
  -2,119
  -2,231
  -2,350
  -2,473
  -2,603
  -2,739
  -2,881
  -3,030
  -3,187
  -3,350
  -3,522
  -3,702
  -3,891
  -4,090
  -4,298
  -4,516
  -4,744
New CAPEX, $m
  -641
  -672
  -700
  -730
  -761
  -793
  -828
  -864
  -903
  -944
  -986
  -1,032
  -1,079
  -1,129
  -1,182
  -1,238
  -1,296
  -1,358
  -1,423
  -1,491
  -1,563
  -1,639
  -1,718
  -1,802
  -1,890
  -1,982
  -2,079
  -2,181
  -2,289
  -2,401
Cash from investing activities, $m
  -1,666
  -1,761
  -1,857
  -1,957
  -2,061
  -2,169
  -2,283
  -2,402
  -2,527
  -2,658
  -2,795
  -2,939
  -3,090
  -3,248
  -3,413
  -3,588
  -3,769
  -3,961
  -4,162
  -4,372
  -4,593
  -4,826
  -5,068
  -5,324
  -5,592
  -5,873
  -6,169
  -6,479
  -6,805
  -7,145
Free cash flow, $m
  1,717
  1,772
  1,834
  1,898
  1,964
  2,033
  2,105
  2,180
  2,258
  2,339
  2,152
  2,240
  2,332
  2,429
  2,529
  2,634
  2,744
  2,859
  2,979
  3,105
  3,237
  3,375
  3,519
  3,671
  3,829
  3,996
  4,170
  4,353
  4,544
  4,745
Issuance/(repayment) of debt, $m
  1,360
  1,411
  1,469
  1,531
  1,596
  1,665
  1,738
  1,815
  1,895
  1,981
  2,070
  2,165
  2,265
  2,370
  2,481
  2,598
  2,721
  2,850
  2,987
  3,130
  3,281
  3,439
  3,606
  3,782
  3,966
  4,160
  4,364
  4,578
  4,804
  5,040
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,360
  1,411
  1,469
  1,531
  1,596
  1,665
  1,738
  1,815
  1,895
  1,981
  2,070
  2,165
  2,265
  2,370
  2,481
  2,598
  2,721
  2,850
  2,987
  3,130
  3,281
  3,439
  3,606
  3,782
  3,966
  4,160
  4,364
  4,578
  4,804
  5,040
Total cash flow (excl. dividends), $m
  3,077
  3,183
  3,303
  3,429
  3,561
  3,699
  3,843
  3,995
  4,153
  4,320
  4,222
  4,405
  4,597
  4,799
  5,010
  5,232
  5,465
  5,709
  5,966
  6,235
  6,518
  6,814
  7,126
  7,452
  7,796
  8,156
  8,534
  8,931
  9,348
  9,785
Retained Cash Flow (-), $m
  -301
  -301
  -314
  -327
  -341
  -356
  -371
  -388
  -405
  -423
  -442
  -462
  -484
  -506
  -530
  -555
  -581
  -609
  -638
  -669
  -701
  -735
  -770
  -808
  -847
  -889
  -932
  -978
  -1,026
  -1,077
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  320
  340
  361
  383
  406
  429
  454
  480
  507
  535
  565
  596
  628
  661
  697
  734
  772
  813
  855
  899
  946
  995
  1,046
  1,100
  1,156
  1,215
  1,277
  1,342
  1,410
  1,481
Cash available for distribution, $m
  2,776
  2,881
  2,989
  3,102
  3,220
  3,343
  3,472
  3,607
  3,749
  3,897
  3,780
  3,943
  4,114
  4,293
  4,480
  4,677
  4,884
  5,101
  5,328
  5,567
  5,817
  6,080
  6,355
  6,645
  6,948
  7,267
  7,602
  7,953
  8,322
  8,709
Discount rate, %
  7.00
  7.35
  7.72
  8.10
  8.51
  8.93
  9.38
  9.85
  10.34
  10.86
  11.40
  11.97
  12.57
  13.20
  13.86
  14.55
  15.28
  16.04
  16.85
  17.69
  18.57
  19.50
  20.48
  21.50
  22.58
  23.70
  24.89
  26.13
  27.44
  28.81
PV of cash for distribution, $m
  2,595
  2,500
  2,392
  2,271
  2,140
  2,001
  1,853
  1,701
  1,546
  1,390
  1,153
  1,015
  882
  757
  639
  532
  435
  350
  277
  214
  163
  121
  88
  62
  43
  29
  19
  12
  7
  4
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Aon plc provides risk management services, insurance and reinsurance brokerage, and human resource consulting and outsourcing services worldwide. The company operates through two segments, Risk Solutions and HR Solutions. The Risk Solutions segment offers retail brokerage services, including affinity products, managing general underwriting, placement, captive management services, and data and analytics; risk management solutions for property liability, general liability, professional liability, directors' and officers' liability, transaction liability, cyber liability, workers' compensation, and various healthcare products; and health and benefits consulting services comprising structuring, funding, and administering employee benefit programs. This segment also provides advisory services to technology, financial services, agribusiness, aviation, construction, health care, energy, and other industries. In addition, this segment offers reinsurance brokerage services for treaty and facultative reinsurance, as well as specialty lines, such as professional liability, workers' compensation, accident, life, and health; actuarial, enterprise risk management, catastrophe management, and rating agency advisory services; and capital management transaction and advisory services for insurance and reinsurance clients. The HR Solutions segment offers human capital services in the areas of retirement, compensation, strategic human capital, investment consulting, benefits administration, exchanges, and human resource business process outsourcing. It provides products and services primarily under the Aon Hewitt brand. Aon plc was founded in 1919 and is headquartered in London, the United Kingdom.

FINANCIAL RATIOS  of  Aon (AON)

Valuation Ratios
P/E Ratio 0
Price to Sales 0
Price to Book 0
Price to Tangible Book
Price to Cash Flow 0
Price to Free Cash Flow 0
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio NaN
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets 0%
Ret/ On Assets - 3 Yr. Avg. 0%
Return On Total Capital 0%
Ret/ On T. Cap. - 3 Yr. Avg. 0%
Return On Equity 0%
Return On Equity - 3 Yr. Avg. 0%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

AON stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AON stock intrinsic value calculation we used $9998 million for the last fiscal year's total revenue generated by Aon. The default revenue input number comes from 2017 income statement of Aon. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AON stock valuation model: a) initial revenue growth rate of 6.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 7%, whose default value for AON is calculated based on our internal credit rating of Aon, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Aon.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AON stock the variable cost ratio is equal to 82.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for AON stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Aon.

Corporate tax rate of 27% is the nominal tax rate for Aon. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AON stock is equal to 3.2%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AON are equal to 102.5%.

Life of production assets of 10 years is the average useful life of capital assets used in Aon operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AON is equal to -19.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4583 million for Aon - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 259 million for Aon is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Aon at the current share price and the inputted number of shares is $37.0 billion.

COMPANY NEWS

▶ Aon Revises Quarterly Dividend   [Jul-31-18 01:19PM  PR Newswire]
▶ Aon Declares Quarterly Dividend   [Jul-30-18 05:00PM  PR Newswire]
▶ Aon plc to Host Earnings Call   [06:30AM  ACCESSWIRE]
▶ Aon Reports Second Quarter 2018 Results   [06:00AM  PR Newswire]
▶ Earnings Outlook For Aon   [Jul-26-18 02:15PM  Benzinga]
▶ [$$] Insurers hit by mounting US storm costs   [Jul-19-18 02:15AM  Financial Times]
▶ [$$] Kenya looks to global pension funds in housing drive   [Jun-27-18 10:00PM  Financial Times]
▶ What is Behind Aon plcs (NYSE:AON) Superior ROE?   [Jun-21-18 08:42AM  Simply Wall St.]
▶ [$$] Abu Dhabi Investment Authority buys 21% stake in PIC   [Jun-19-18 03:55AM  Financial Times]
▶ [$$] The winners and losers in UK pension miscalculation   [Jun-15-18 08:04AM  Financial Times]
▶ Aon: 1Q Earnings Snapshot   [06:43AM  Associated Press]
▶ Aon Reports First Quarter 2018 Results   [06:30AM  PR Newswire]
▶ [$$] Work of fiction: How to write a corporate novel   [Apr-18-18 11:01PM  Financial Times]
▶ Five Insurance Stocks to Consider Amid Higher Interest Rates   [Apr-16-18 09:54PM  Insider Monkey]
▶ Aon Announces 11% Increase to Annual Cash Dividend   [Apr-13-18 05:15PM  PR Newswire]
▶ Aon plc (NYSE:AON): Are Analysts Bullish?   [Mar-27-18 01:38PM  Simply Wall St.]
▶ Insurance Labor Study Highlights Stabilizing Labor Market   [Feb-19-18 11:57AM  Business Wire]
▶ [$$] How managers can put data on sick leave to a healthy use   [Feb-14-18 11:00PM  Financial Times]
▶ Weekly Top Insider Buys Highlight for the Week of Feb. 9   [Feb-11-18 09:50AM  GuruFocus.com]
▶ Company News For Feb 5, 2018   [10:35AM  Zacks]
▶ Aon reports 4Q loss   [08:37AM  Associated Press]
▶ New Strong Sell Stocks for January 25th   [Jan-25-18 08:48AM  Zacks]
▶ Aon Declares Quarterly Dividend   [Jan-15-18 04:30PM  PR Newswire]
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