Aon plc (AON) — Executive Summary Aon plc is a global provider of risk management, insurance brokerage and human capital solutions with a financial profile marked by robust cash generation and double‑digit margins — the most recent net profit margin was 21.5% (latest quarter) while trailing‑twelve‑month net income reached $3.94B . Financial Performance & Growth The company shows durable compoundin
Aon plc is a global provider of risk management, insurance brokerage and human capital solutions with a financial profile marked by robust cash generation and double‑digit margins — the most recent net profit margin was 21.5% (latest quarter) while trailing‑twelve‑month net income reached $3.94B.
The company shows durable compounding on several fronts: five‑year diluted EPS compounded at 12.79% and revenue per share compounded at 9.20% over five years, with revenue per share at $79.14 as of 2025-12-31. Book value per share CAGR is strong at 21.76% over five years, and return on equity remains elevated at 39.5% most recently (Return on Equity (ROE)).
Cash generation is a clear strength — operating cash flow (TTM) has clustered around $3.15B and free cash flow margin stands at 24.22% (Strategic Capital Allocation; Earnings Quality Analysis).
Areas of note that introduce risk include earnings and capital variability. ROE growth is negative at -8.88% year‑over‑year, reflecting some deterioration in return expansion despite a high absolute ROE (Return on Equity (ROE)). Diluted EPS has been volatile quarter-to-quarter with swings including -29.9% and -27.7%, followed by +39.2% and +54.7%, and net income (TTM $3.94B) now exceeds operating cash flow (TTM $3.15B), reversing earlier periods when cash flow exceeded earnings (EPS Diluted & Revenue per Share; Revenue & Net Income). Investing and financing cash flows have shown wide swings—most recent investing CF TTM is -$816M; financing CF TTM is -$1.84B—adding volatility to free cash deployment (Strategic Capital Allocation). The market multiple has contracted significantly, with the trailing P/E falling to 17.8x as of 2026-03-31, down from 34.0x a year earlier.
Key fundamentals to watch going forward include sustained revenue‑per‑share growth and the next quarterly path of diluted EPS ($18.16 as of 2026-03-31), the relationship of operating cash flow to net income (OCF TTM $3.15B vs $3.94B), free cash flow margin (24.22%), interest coverage (7.31x), and net debt relative to owner earnings (effectively 0.0). Monitoring the evolution of the P/E multiple remains key (Revenue & EPS Growth; Earnings Quality Analysis; Price-to-Earnings (PE) Ratio Trend).
The foundation of business quality and long-term value creation
Aon plc's revenue shows a multi-year upward shift into the $3–4.5B range, rising from mostly sub-$3B quarters in 2018–2020 to a run of $3.7–4.7B quarters in 2023–2025. In the most recent year, revenue peaked at $4.73B in Q1 2025, then eased to $4.16B and $4.00B in Q2–Q3 before recovering to $4.30B in Q4 2025, indicating a consolidation around the $4.0B level.
Net income has been more variable across the same period. After a loss of $891.0M in Q3 2021 and a large $2.00B figure recorded in the 2023-12-31 row, net income showed a mid-2025 decline (Q1–Q3 2025: $965M — $579M — $458M) followed by a sharp rebound to $1.69B in Q4 2025 and $1.21B in Q1 2026. The most recent quarterly revenue was $4.30B (period ending 2025-12-31). The most recent quarterly net income was $1.21B (period ending 2026-03-31).
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Period Information
Report Type: Annual (10-K)
Period: Jan 2025 to Dec 2025
Revenue composition by disclosure category for the latest period
Analyzing long-term margin stability and competitive positioning
Aon plc's net profit margin shows notable variability over the sampled period. Margins peaked in early-to-mid 2024 at 26.8% (2024-03-31) and 25.4% (2024-06-30), then declined to the mid-teens through the first three quarters of 2025 (15.6% on 2025-03-31, 15.5% on 2025-06-30, 16.0% on 2025-09-30) before rising to 21.5% in the most recent quarter (2025-12-31). Across earlier years, the net margin generally clustered in the low-to-mid teens with intermittent higher and lower readings.
Gross margin in the available recent quarters has been in the mid-20% range, with 24.4% at 2024-12-31, 23.4% at 2025-03-31, and 25.3% at 2025-12-31. The dataset contains large historical swings in reported gross margin (including extreme outliers in 2017–2019), while the most recent operating margin observation in the set is 14.3% dated 2018-12-31. The most recent Gross Margin was 25.3%, the most recent Operating Margin (latest available data point) was 14.3% (period end 2018-12-31), and the most recent Net Profit Margin was 21.5%.
Understanding Profit Margins
Between Jan 2025 and Dec 2025, Aon Plc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Aon plc's trailing twelve‑month net income has risen steadily over the most recent year, climbing from $2.55B at 2025-03-31 to $2.60B (2025-06-30), $2.72B (2025-09-30), then accelerating to $3.69B (2025-12-31) and $3.94B (2026-03-31). The most notable inflection is the step-up in late 2025 when net income moved substantially higher relative to prior quarters; in the latest quarter net income sits above the company's operating cash flow TTM.
Operating cash flow (TTM) has been comparatively stable in the low‑to‑mid $3.0B range, with recent values of $2.87B (2025-03-31) recovering to $3.15B (2025-06-30). Earlier periods show operating cash flow exceeding net income (for example 2023-12-31 CF $3.44B vs NI $2.56B), but in the most recent data net income outpaces cash flow. The most recent Net Income (TTM) was $3.94B and the most recent Operating Cash Flow (TTM) was $3.15B.
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
Aon plc's ROE has been elevated through 2024–2025 but shows a downward move from the mid-2024 peak and a partial recovery late in 2025. After a high of 61.4% at 2024-06, ROE fell to 43.4% at 2024-12, moved lower through the first half of 2025 to 33.2% at 2025-06, then rose to 39.5% by 2025-12. The most recent quarters show a trough in mid-2025 followed by a rebound into the high-30s by year-end.
Earlier periods include extreme volatility around 2022–2023 (489.4% at 2022-12 and -345.6% at 2023-12) before returning to more typical high-single- to double-digit percentages in prior years. The most recent return on equity (ROE) was 39.5%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
Aon plc's trailing twelve-month operating cash flow has been broadly stable over the past several years, clustering around the low-$3.0B range. After a peak of $3.44B at 2023-12-31, operating cash flow modestly declined and stood at $3.15B in the latest 2025-06-30 TTM reading, showing relatively limited variability quarter-to-quarter.
Investing and financing cash flows have been more volatile. Investing cash flow swung from large outflows (e.g., -$2.83B at 2024-12-31 and -$2.50B at 2024-09-30) to a positive $1.84B at 2025-03-31 before moving back to an outflow of -$816.0M at 2025-06-30. Financing cash flow likewise showed wide swings, with a large outflow of -$4.81B at 2025-03-31, a prior inflow of $796.0M at 2024-12-31, and a more moderate outflow of -$1.84B at 2025-06-30.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
Aon plc’s trailing twelve‑month P/E has contracted markedly over the past year. After a peak at 34.0x on , the ratio fell to 29.8x on and 28.5x on , then dropped more steeply to 20.7x at and 17.8x at . The most recent quarters therefore show a clear downward trajectory toward the current mid‑teens level.
Historically the series shows earlier pronounced peaks — notably 64.0x on and 52.6x on — and much lower readings in the 2010 period (8.7–8.9x). Relative to that history, the latest reading sits below the multi‑year average seen since 2018 and above the decade lows from 2010. The most recent price-to-earnings (P/E) ratio for Aon plc was 17.8x as of .
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.