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Arthur J Gallagher (AJG) Beats on Q3 Earnings & Revenues
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Arthur J Gallagher & Co. (AJG - Free Report) reported third-quarter 2016 adjusted net earnings of 77 cents per share that surpassed the Zacks Consensus Estimate by a penny. The bottom line remained flat year over year.
The company’s outperformance in the quarter was driven by strong performance from the Brokerage segment.
Net profit decreased 8% year over year to 69 cents per share.
Operational Update
Total revenue was $1.48 billion, up 2.8% year over year. The upside was driven by 8% growth in total adjusted revenues in the Brokerage segment. Revenues beat the Zacks Consensus Estimate if $1.46 billion.
Total commissions and fees earned improved 3.4% year over year to $987.9 million in the quarter.
Arthur J Gallagher’s total expense increased 2.8% year over year to $1.39 billion in the quarter. Expenses escalated due to a rise in compensation cost, cost of revenues, interest expenses and higher depreciation and amortization expenses.
Earnings before interest, tax, depreciation and amortization (EBITDAC) decreased 2.9% to $216.4 million.
Segment Results
Brokerage: Adjusted revenues of $876.5 million increased 8% year over year on higher commissions. Total expense increased 2.2% year over year to $728.5 million.
Adjusted EBITDAC increased 9% to $244.8 million.
Risk Management: Adjusted revenues amounted to $176.7 million, down 2% year over year due to lower fees. Total expense decreased 1% year over year to $155.2 million.
Adjusted EBITDAC decreased 7% year over year to $29.6 million.
Corporate
Total revenue came in at $428 million, down 2.7% year over year.
Total expense increased 5.1% year over year.
EBITDAC came in as a loss of $42.7 million, wider than a loss of $9.7 million in the prior-year quarter.
Financial Update
Total assets as of Sep 30, 2016 were $11.2 billion, up 10.7% from $10.9 billion at year-end 2015.
Cash and cash equivalents at the end of the quarter decreased 14% to $531.8 million from year-end 2015.
Shareholders’ equity increased 1.3% from the 2015-end level to $3.7 billion at the end of the quarter.
Acquisition Update
During the quarter, the company closed seven acquisitions with annualized revenues of over $27.4 million.
Among other players in the insurance industry that have reported their third-quarter earnings so far, earnings at Progressive Corp. (PGR - Free Report) and MGIC Investment Corp. (MTG - Free Report) beat their respective Zacks Consensus Estimate, while the bottom line of RLI Corp. (RLI - Free Report) missed the same.
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Arthur J Gallagher (AJG) Beats on Q3 Earnings & Revenues
Arthur J Gallagher & Co. (AJG - Free Report) reported third-quarter 2016 adjusted net earnings of 77 cents per share that surpassed the Zacks Consensus Estimate by a penny. The bottom line remained flat year over year.
The company’s outperformance in the quarter was driven by strong performance from the Brokerage segment.
Net profit decreased 8% year over year to 69 cents per share.
Operational Update
Total revenue was $1.48 billion, up 2.8% year over year. The upside was driven by 8% growth in total adjusted revenues in the Brokerage segment. Revenues beat the Zacks Consensus Estimate if $1.46 billion.
Total commissions and fees earned improved 3.4% year over year to $987.9 million in the quarter.
Arthur J Gallagher’s total expense increased 2.8% year over year to $1.39 billion in the quarter. Expenses escalated due to a rise in compensation cost, cost of revenues, interest expenses and higher depreciation and amortization expenses.
Earnings before interest, tax, depreciation and amortization (EBITDAC) decreased 2.9% to $216.4 million.
Segment Results
Brokerage: Adjusted revenues of $876.5 million increased 8% year over year on higher commissions. Total expense increased 2.2% year over year to $728.5 million.
Adjusted EBITDAC increased 9% to $244.8 million.
Risk Management: Adjusted revenues amounted to $176.7 million, down 2% year over year due to lower fees. Total expense decreased 1% year over year to $155.2 million.
Adjusted EBITDAC decreased 7% year over year to $29.6 million.
Corporate
Total revenue came in at $428 million, down 2.7% year over year.
Total expense increased 5.1% year over year.
EBITDAC came in as a loss of $42.7 million, wider than a loss of $9.7 million in the prior-year quarter.
Financial Update
Total assets as of Sep 30, 2016 were $11.2 billion, up 10.7% from $10.9 billion at year-end 2015.
Cash and cash equivalents at the end of the quarter decreased 14% to $531.8 million from year-end 2015.
Shareholders’ equity increased 1.3% from the 2015-end level to $3.7 billion at the end of the quarter.
Acquisition Update
During the quarter, the company closed seven acquisitions with annualized revenues of over $27.4 million.
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Zacks Rank and Performance of Other Insurers
Arthur J Gallagher presently carries a Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other players in the insurance industry that have reported their third-quarter earnings so far, earnings at Progressive Corp. (PGR - Free Report) and MGIC Investment Corp. (MTG - Free Report) beat their respective Zacks Consensus Estimate, while the bottom line of RLI Corp. (RLI - Free Report) missed the same.
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>>