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Watson Wyatt Worldwide, Inc. (WW) is a Zacks #1 (Strong Buy) company as was the case when it was featured last month. Shares of Watson Wyatt hit a 52-week high when it reported fiscal third-quarter results last week and currently trades just slightly below that level. Third-quarter earnings of 96 cents per share topped the year-prior 76 cents and exceeded the consensus estimate by almost 16%. Watson Wyatt’s ROE of 17% is ahead of industry’s average of 12%. With very few of the company’s peers paying dividends, WW’s yield of 0.5% stands above the industry average.

Full Analysis

Watson Wyatt Worldwide, Inc. designs, develops and implements human resource strategies and programs in five principal practice areas, which include benefits; technology and administration solutions; human capital consulting; insurance and financial services; and investment consulting. The company has 6,700 associates in 31 countries.

Technical Growth

The company is a Zacks #1 Rank (Strong Buy) as was the case when it was featured last month. Shares of Watson Wyatt hit a 52-week high when it reported fiscal third-quarter results last week and currently trades just slightly below that level.

Fundamental Growth

Third-quarter earnings of 96 cents per share topped the year-prior 76 cents and exceeded the consensus estimate by almost 16%. Quarterly revenues came in at $457.5 million, a year-over-year increase of 16% (14% constant currency) from $395.6 million.

Watson Wyatt’s return on equity of 17% is ahead of industry’s average of 12%, and the company’s net margin of 8.6% is above the industry’s 4.5%.

Higher Estimates

The company upped its fiscal year earnings guidance to a range of $3.29 to $3.32 per share (assuming an average exchange rate of 1.95 U.S. dollars to the British pound for the fourth quarter of fiscal year 2008. For the fourth quarter, WW sees a range of 74 to 77 cents per share.

Wall Street responded with upward revisions. Three out of five analysts lifted earnings forecasts for the year ending June 2008 to $3.30 per share from last month’s $3.23. The most accurate estimate is even higher at $3.34 per share. Fourth-quarter projections call for 78 cents per share.

Income

Watson Wyatt offers annual dividend of 30 cents and declared a quarterly dividend of $0.075 per share in mid-November, which was paid out on January 15, 2008. With very few of the company’s peers paying dividends, WW’s yield of 0.5% stands above the industry average.

Source: Watson Wyatt: Stock with Above-Average Yield and Increasing Growth