Why Towers Watson Shares Plunged

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of risk management and human resources consulting company Towers Watson (NYS: TW) sank 11% today after its quarterly results and outlook came in below Wall Street expectations.

So what: Although the company's fourth-quarter profit managed to top estimates, a big miss on the top line -- revenue slipped 3% to $826.2 million versus the consensus of $868.1 million -- coupled with downbeat guidance for the current quarter, reinforces concerns of slowing global demand. Management cited billing transition challenges and weakness in Europe for the revenue shortfall, giving investors little hope for a near-term turnaround.

Now what: Management now expects first-quarter EPS of $1.05-$1.10 on revenue of $805 million-$825 million, well below the average analyst estimates of $1.25 and $852.1 million, respectively. "We continue to see overall positive net momentum in the business," CEO John Haley reassured investors. "We remain committed to our disciplined management approach, our growth strategies, and most importantly, helping our clients navigate through these uncertain times." With the stock hitting a new 52-week low today and trading at a single-digit forward P/E, buying into that bullishness might not be a bad bet.

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The article Why Towers Watson Shares Plunged originally appeared on Fool.com.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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