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Arthur J. Gallagher & Co. (AJG) - free report >>
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Arthur J. Gallagher & Co. (AJG) - free report >>
Erie Indemnity Company (ERIE) - free report >>
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Arthur J Gallagher Poised for Growth Despite Rising Expenses
On Sep 12, 2016, we issued an updated research report on Arthur J Gallagher & Co. (AJG - Free Report) .
Arthur J Gallagher remains focused on tapping opportunities in the U.K., Australia, New Zealand, Canada and the U.S. Also, we expect contribution from international operations to increase going forward.
The insurance broker’s inorganic growth profile continues to flourish with strategic acquisitions, mainly within the brokerage segment. In addition, Arthur J Gallagher has stepped up its acquisition activity in the retail employee benefits brokerage and wholesale brokerage areas. The company intends to undertake even more acquisitions in the second half of the year.
Further, a strong operational performance has contributed in the generation of solid cash flows, thereby enabling Arthur J Gallagher to pursue the necessary strategic initiatives.
Notably, riding on its operational strength, the company is anticipated to witness 15% earnings growth in 2016.
Moreover, a strong capital and liquidity position enables the insurance broker to enhance its shareholder value.
However, the insurance broker has been witnessing escalating expenses, owing to higher compensation and operating expenses. This, in turn, has adversely affected operating margin.
Also, the company has been experiencing increasing debt level resulting in rise in interest expenses. This in turn weighed heavily on margin expansion.
Zacks Rank and Stocks to Consider
Currently, Arthur J Gallagher carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the insurance industry include Erie Indemnity Company (ERIE - Free Report) , National Interstate Corporation (NATL - Free Report) and NMI Holdings, Inc. (NMIH - Free Report) . While Erie Indemnity holds a Zacks Rank #2 (Buy), both National Interstate and NMI Holdings sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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