Aon plc (AON) Stock Analysis — Fair Value, Risk & Moat Rating
NYQ · Financial Services · Insurance Brokers
Is Aon plc a safe investment right now?
Aon plc's Altman Z-Score of 1.48 places it in the distress zone. Our valuation model estimates fair value at $458.86, suggesting the stock may be undervalued by 28%. Moat rating: 2.7/5 stars.
Could Aon plc go bankrupt? Altman Z-Score analysis
Z-Score of 1.48 falls below the 1.8 distress threshold, indicating significant financial stress.
- Below 1.8 — Distress Zone (high bankruptcy risk)
- 1.8 to 3.0 — Gray Zone (elevated uncertainty)
- Above 3.0 — Safe Zone (financially healthy)
What drives AON's Z-Score?
| Component | Formula | Value | Weight | Contribution |
|---|---|---|---|---|
| A · Working Capital / Total Assets | WC / TA | 0.0089 | 1.2 | 0.01 |
| B · Retained Earnings / Total Assets | RE / TA | -0.0472 | 1.4 | -0.07 |
| C · EBIT / Total Assets | EBIT / TA | 0.0773 | 3.3 | 0.26 |
| D · Market Cap / Total Liabilities | MCap / TL | 1.6774 | 0.6 | 1.01 |
| E · Revenue / Total Assets | Rev / TA | 0.2732 | 1.0 | 0.27 |
How has AON's financial health changed over time?
| Year | Z-Score | Zone |
|---|---|---|
| 2016 | 2.53 | Gray |
| 2017 | 2.46 | Gray |
| 2018 | 2.75 | Gray |
| 2019 | 2.6 | Gray |
| 2020 | 2.29 | Gray |
| 2021 | 2.16 | Gray |
| 2022 | 1.95 | Gray |
| 2023 | 1.77 | Distress |
| 2024 | 1.82 | Gray |
| 2025 | 1.48 | Distress |
Source: Calculated from AON's latest 10-K filing on SEC EDGAR.
What is Aon plc actually worth?
Fair value range: $251.40 — $511.22
Valuation Methods
| Method | Fair Value | Weight | Detail |
|---|---|---|---|
| Historical PE × Forward EPS | $511.22 | 50% | 23.9x avg PE (4 years) × $21.39 forward EPS |
| DCF (Discounted Cash Flow) | $509.89 | 30% | Two-stage DCF: $3.1B TTM FCF, 13.9% growth, 7.9% WACC |
| EV/FCF Multiple | $251.40 | 20% | TTM FCF × 22x multiple + net cash |
Assumptions & Data Sources
| Parameter | Value | Source |
|---|---|---|
| FCF Growth Rate (Stage 1) | 13.9% | 70% analyst consensus + 30% historical |
| Analyst EPS Growth (This Year) | 11.2% | Consensus (19 analysts) |
| Analyst EPS Growth (Next Year) | 12.7% | Consensus |
| Historical 5Y FCF CAGR | 18.6% | SEC EDGAR |
| Terminal Growth Rate | 2.5% | Long-term GDP proxy |
| Discount Rate (WACC) | 7.9% | CAPM (Rf=4.3% + 0.82*5.5%) |
| Net Cash / (Debt) | $-13,453M | Balance sheet |
| Base FCF (TTM) | $3.1B | Trailing 12 months |
| Shares Outstanding | 214,254,496 | Latest |
Sensitivity Analysis
| Growth Rate | 8% WACC | 10% WACC | 7.9% WACC | 13% WACC |
|---|---|---|---|---|
| 0% | $229.90 | $169.90 | $234.06 | $122.59 |
| 2.5% | $266.16 | $195.18 | $271.08 | $139.41 |
| 5.0% | $307.75 | $224.08 | $313.57 | $158.53 |
| 7.5% | $364.50 | $262.86 | $371.58 | $183.62 |
Free Cash Flow History
| Year | FCF | Growth |
|---|---|---|
| 2016 | $1.6B | — |
| 2017 | $1.8B | +16.3% |
| 2018 | $2.2B | +20.0% |
| 2019 | $0.6B | +-74.6% |
| 2020 | $1.4B | +162.4% |
| 2021 | $1.6B | +11.3% |
| 2022 | $2.6B | +64.1% |
| 2023 | $2.0B | +-22.6% |
| 2024 | $3.0B | +47.8% |
| 2025 | $3.2B | +5.3% |
Source: FCF data from SEC EDGAR filings. Price via Yahoo Finance.
Does Aon plc have a durable competitive advantage?
Moat rating: 2.7/5.
What makes up AON's moat score?
ROIC Stability
ROIC variability over the past decade. Score: 3/5.
Gross Margin Trend
Gross margin trajectory over the past decade. Score: 3/5.
Switching Costs
Estimated customer lock-in based on margin level. Score: 2/5.
How stable is AON's return on invested capital?
| Year | ROIC | Trend |
|---|---|---|
| 2016 | 14.2% | — |
| 2017 | 11.2% | Declining |
| 2018 | 13.6% | Rising |
| 2019 | 8.1% | Declining |
| 2020 | 11.2% | Rising |
| 2021 | 14.8% | Rising |
| 2022 | 21.6% | Rising |
| 2023 | 16.9% | Declining |
| 2024 | 29.8% | Rising |
| 2025 | 14.6% | Declining |
Source: ROIC calculated from SEC EDGAR filings.
Is Aon plc's dividend safe?
Can Aon plc afford its dividend?
Payout ratio is 17.1%. FCF covers the dividend 5.6x. 40 consecutive years of payments.
Aon plc's key financial metrics
| Metric | Latest | 1Y Ago | 3Y Ago | Trend |
|---|---|---|---|---|
| Revenue | $13.4B | $12.5B | $11.1B | Rising |
| Net Income | $2.6B | $2.6B | $2.0B | Rising |
| Free Cash Flow | $3.2B | $3.0B | $2.6B | Rising |
Common questions about Aon plc
Is Aon plc at risk of going bankrupt?
Aon plc's Altman Z-Score of 1.48 places it in the distress zone. This metric uses balance sheet ratios to predict bankruptcy probability within 2 years. A score below 1.8 signals distress, while above 3.0 indicates safety.
What is Aon plc's estimated fair value?
Our valuation model estimates Aon plc's fair value at $458.86 per share. The current margin of safety is 27.7%. This estimate uses a PE-based approach with analyst consensus earnings.
Does Aon plc have a competitive moat?
Aon plc receives a moat rating of 2.7 out of 5 stars, based on ROIC stability, gross margin trends, and estimated switching costs. A rating above 3.5 suggests a durable competitive advantage.
Is Aon plc's dividend safe?
Our dividend safety analysis examines payout ratio, free cash flow coverage, and the company's streak of consecutive dividend payments to determine whether the current payout is sustainable.
Before you invest in Aon plc, make sure you truly understand it.
A deep understanding of a company's fundamentals, risk profile, and competitive position dramatically increases your investment accuracy and odds of success.
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FairValueLabs Disclaimer
All valuations, scores, ratings, and classifications on this page are produced by the FairValueLabs internal valuation system. They do not represent actual market value, guaranteed outcomes, or professional investment advice. These are analytical estimates for educational and research purposes only.
This is not financial advice. All data is sourced from SEC EDGAR public filings. Always consult a qualified financial advisor before making investment decisions.
Last updated: Apr 20, 2026. Data sources: SEC EDGAR (financial statements), Yahoo Finance (market data, analyst consensus). Data may not reflect the most recent quarter.
AON analysis methodology: How we calculate fair value, Z-Scores, and moat ratings