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Arthur J Gallagher (AJG): Will Q3 Earnings Disappoint?
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Arthur J Gallagher & Co. (AJG - Free Report) is set to report third-quarter 2016 results on Oct 27, after the market closes. Last quarter, the company posted a positive earnings surprise of 1.04%.
Let’s see how things are shaping up for this announcement.
Factors to be Considered this Past Quarter
Escalating costs (including compensation, operating and interest expenses) are likely to weigh on margins. Also, the company estimates integration costs for the second half of 2016 between 6 cents per share and 7 cents per share. Adverse forex are likely to hamper bottom-line growth.
However, Arthur J Gallagher’s top line is likely to benefit from robust domestic and international operations as well as strategic acquisitions made by the company in the third quarter. The brokerage segment is expected to post another solid quarter. The company also anticipates organic growth to improve.
With respect to the surprise trend, Arthur J Gallagher delivered positive surprises in each out of the last four quarters, with an average beat of 8.83%. The stock price has been declining over the last few days. We wait to see how the stock fares post third-quarter earnings release.
Our proven model does not conclusively show that Arthur J Gallagher is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Arthur J Gallagher has an Earnings ESP of -2.63%. This is because both the Most Accurate estimate stands 74 cents while the Zacks Consensus Estimate stands higher at 76 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Arthur J Gallagher carries a Zacks Rank #4, which increases the predictive power of ESP. However, a negative Earnings ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the insurance industry that you may want to consider as these have the right combination of elements to post an earnings beat this quarter.
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +1.61% and a Zacks Rank #3. The company is set to report third-quarter earnings on Nov 2.
Cigna Corp. (CI - Free Report) has an Earnings ESP of +2.62% and a Zacks Rank #3. The company is likely to report third-quarter earnings on Nov 3.
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Arthur J Gallagher (AJG): Will Q3 Earnings Disappoint?
Arthur J Gallagher & Co. (AJG - Free Report) is set to report third-quarter 2016 results on Oct 27, after the market closes. Last quarter, the company posted a positive earnings surprise of 1.04%.
Let’s see how things are shaping up for this announcement.
Factors to be Considered this Past Quarter
Escalating costs (including compensation, operating and interest expenses) are likely to weigh on margins. Also, the company estimates integration costs for the second half of 2016 between 6 cents per share and 7 cents per share. Adverse forex are likely to hamper bottom-line growth.
However, Arthur J Gallagher’s top line is likely to benefit from robust domestic and international operations as well as strategic acquisitions made by the company in the third quarter. The brokerage segment is expected to post another solid quarter. The company also anticipates organic growth to improve.
With respect to the surprise trend, Arthur J Gallagher delivered positive surprises in each out of the last four quarters, with an average beat of 8.83%. The stock price has been declining over the last few days. We wait to see how the stock fares post third-quarter earnings release.
GALLAGHER ARTHU Price and EPS Surprise
GALLAGHER ARTHU Price and EPS Surprise | GALLAGHER ARTHU Quote
Earnings Whispers
Our proven model does not conclusively show that Arthur J Gallagher is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Arthur J Gallagher has an Earnings ESP of -2.63%. This is because both the Most Accurate estimate stands 74 cents while the Zacks Consensus Estimate stands higher at 76 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Arthur J Gallagher carries a Zacks Rank #4, which increases the predictive power of ESP. However, a negative Earnings ESP makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies from the insurance industry that you may want to consider as these have the right combination of elements to post an earnings beat this quarter.
American Financial Group Inc. (AFG - Free Report) , which is slated to report third-quarter earnings on Nov 1, has an Earnings ESP of +2.61% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Allstate Corporation (ALL - Free Report) has an Earnings ESP of +1.61% and a Zacks Rank #3. The company is set to report third-quarter earnings on Nov 2.
Cigna Corp. (CI - Free Report) has an Earnings ESP of +2.62% and a Zacks Rank #3. The company is likely to report third-quarter earnings on Nov 3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>