On Jun 7, 2016, shares of Brown & Brown Inc. (BRO Quick QuoteBRO - Free Report) hit a 52-week high of $36.40, driven by better-than-expected first-quarter 2016 results and strategic buyout. About 0.4 million shares exchanged hands in the last trading session and the stock finally closed at $36.32, up 0.4%. Year to date, the stock has returned 13.2%, comparing favorably with 3.3% by the S&P 500.

Brown & Brown’s operating earnings of 44 cents per share in the first quarter surpassed the Zacks Consensus Estimate by 4.8% and improved 12.8% year over year on higher revenues. This Zacks Rank #3 (Hold) insurance broker delivered positive surprises in the two of last four quarters, with an average beat of 4.7%.

Revenues improved on higher commissions and fees. Investment income doubled in the quarter.

While debt balance declined 2% from the 2015-end level, leverage ratios improved at quarter end.

Brown & Brown’s impressive growth is driven by organic and inorganic means across all its segments. Its strong operational performance has helped in generating solid cash flows. This provides the company sufficient free cash flow for strategic initiatives and shareholder-friendly moves. The insurance broker has $375 million remaining under its share repurchase authorization. These together should help the company to continue posting solid results over the longer term. The expected long-term earnings growth is 9%.

With respect to strategic buyouts, in mid-May, Brown & Brown agreed to acquire all the operating assets of Morstan General Agency. This acquisition will help Brown & Brown in expanding its capabilities in commercial lines, personal lines, employee benefits and life insurance products. Strategic acquisitions and mergers help the company to spread its operations geographically besides enhancing and diversifying its product portfolio.

The Zacks Consensus Estimate is currently pegged at $1.77 for 2016 and $1.92 for 2017, which translate into a year-over-year increase of 3.8% and 8.31%, respectively.

Stocks to Consider

Some better-ranked stocks from the insurance industry are Hannover Rück SE (HVRRY Quick QuoteHVRRY - Free Report) , Marsh & McLennan Companies, Inc. (MMC Quick QuoteMMC - Free Report) and Loews Corp. (L Quick QuoteL - Free Report) . Each of these stocks carries Zacks Rank #2 (Buy).

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