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Why Is Brown & Brown (BRO) Down 4.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Brown & Brown (BRO - Free Report) . Shares have lost about 4.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Brown & Brown due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Brown & Brown Q4 Earnings, Revenues Beat, Rise Y/Y
Brown & Brown, Inc.’s fourth-quarter 2022 adjusted earnings of 50 cents per share beat the Zacks Consensus Estimate by 13.4%. The bottom line increased 19% year over year.
The quarterly results reflected improved organic growth and higher net investment income, partly offset by higher expenses.
Q4 Details
Total revenues of $901.4 million beat the Zacks Consensus Estimate by 0.6%. The top line improved 22.1% year over year. The upside can be primarily attributed to commission and fees, which grew 21.3% year over year to $864.8 million. Organic revenues improved 7.8% to $764.7 million in the quarter under review.
Investment income increased year over year to $4.7 million from $0.2 million in the year-ago quarter. Adjusted EBITDAC was $283.1 million, up 34.9% year over year. EBITDAC margin expanded 560 basis points year over year to 31.2%.
Total expenses increased 18.3% to $707.2 million due to a rise in employee compensation and benefits, other operating expenses, amortization, depreciation and interest expenses.
Financial Update
Brown & Brown exited 2022 with cash and cash equivalents of $579.5 million, up 38.3% from the 2021-end level.
Long-term debt of $4 billion as of Dec 31, 2022 nearly doubled from 2021 end.
Net cash provided by operating activities in 2022 was $881.4 million, up 5% year over year.
Full-Year 2022 Highlights
Full-year adjusted earnings of $2.28 per share beat the Zacks Consensus Estimate of $2.24. The bottom line increased 6.5% year over year.
Revenues of $3.6 billion increased 17.1% year over year and were almost in line with the consensus estimate. Commissions and fees increased 16.9%, while organic revenues grew 8.1%.
Adjusted EBITDAC was $1.2 billion, up 15.9% year over year. EBITDAC margin contracted 40 basis points year over year to 31.2%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Brown & Brown has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Brown & Brown has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Brown & Brown (BRO) Down 4.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Brown & Brown (BRO - Free Report) . Shares have lost about 4.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Brown & Brown due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Brown & Brown Q4 Earnings, Revenues Beat, Rise Y/Y
Brown & Brown, Inc.’s fourth-quarter 2022 adjusted earnings of 50 cents per share beat the Zacks Consensus Estimate by 13.4%. The bottom line increased 19% year over year.
The quarterly results reflected improved organic growth and higher net investment income, partly offset by higher expenses.
Q4 Details
Total revenues of $901.4 million beat the Zacks Consensus Estimate by 0.6%. The top line improved 22.1% year over year. The upside can be primarily attributed to commission and fees, which grew 21.3% year over year to $864.8 million. Organic revenues improved 7.8% to $764.7 million in the quarter under review.
Investment income increased year over year to $4.7 million from $0.2 million in the year-ago quarter. Adjusted EBITDAC was $283.1 million, up 34.9% year over year. EBITDAC margin expanded 560 basis points year over year to 31.2%.
Total expenses increased 18.3% to $707.2 million due to a rise in employee compensation and benefits, other operating expenses, amortization, depreciation and interest expenses.
Financial Update
Brown & Brown exited 2022 with cash and cash equivalents of $579.5 million, up 38.3% from the 2021-end level.
Long-term debt of $4 billion as of Dec 31, 2022 nearly doubled from 2021 end.
Net cash provided by operating activities in 2022 was $881.4 million, up 5% year over year.
Full-Year 2022 Highlights
Full-year adjusted earnings of $2.28 per share beat the Zacks Consensus Estimate of $2.24. The bottom line increased 6.5% year over year.
Revenues of $3.6 billion increased 17.1% year over year and were almost in line with the consensus estimate. Commissions and fees increased 16.9%, while organic revenues grew 8.1%.
Adjusted EBITDAC was $1.2 billion, up 15.9% year over year. EBITDAC margin contracted 40 basis points year over year to 31.2%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Brown & Brown has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Brown & Brown has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.