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Brown & Brown Hits 52-Week High: Will the Stock Rally Ahead?
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Shares of Brown & Brown, Inc. (BRO - Free Report) hit a new 52-week high of $28.02 on May 22, gaining traction from strong first-quarter 2018 earnings and a recent buyout. About 0.6 million shares exchanged hands in the last trading session and the stock finally closed at $27.78. The company’s return on equity has been an impressive at 11.2% when compared with the industry average of 10.4%.
Solid Q1 Results
Brown & Brown's bottom line of 33 cents outpaced the Zacks Consensus Estimate by 13.8% and improved year over year on solid organic revenue growth, higher commissions and fees as well as low tax incidence.
Shares of the company have gained 3.8% since it posted strong first-quarter results, outperforming the industry’s increase of 0.6% over the same time frame. This Zacks Rank #3 (Hold) insurance broker flaunts a stellar surprise history, beating estimates for 10 straight quarters with an average beat of 7.9%.
Acquisition
Recently, Brown & Brown purchased almost all the assets of Automotive Development Group, LLC. This latest transaction will not only enable the acquirer to boost its presence but also its growth in the auto warranty and Finance and Insurance (F&I) training domain.
Why Should the Stock Continue the Bull Run?
Brown & Brown’s impressive growth is driven by organic and inorganic means across all segments.
Strategic efforts drove commission and fees pushed up revenues to witness a five-year CAGR of 8%. The company projects revenues to grow between $8 million and $11 million in 2018.
Brown & Brown has plans to implement a new annual incentive program for its middle-market producers in the Retail division, which has been created to pay for increased activities. The company anticipates this program to fuel growth in the future through focus on customer retention and new business. Core Commercial Program launched in collaboration with QBE will be licensed in all 50 states, mainly targeting the middle-market companies with annual premiums of $0.1 million and below. These initiatives will help the company achieve its guidance and ensure solid revenue generation.
Additionally, the company boasts a strong capital and liquidity position, which gives it financial flexibility as well as the power to engage in shareholder-friendly moves. Its dividend yield of 1.1% betters the industry average of 0.9%, thereby making it an attractive pick for yield-seeking investors.
The Zacks Consensus Estimate for 2018 reflects a 28.1% increase on 4% higher revenues. The consensus mark for revenues and earnings per share in 2019 translates into a year-over-year rise of 8.6% and 5.7% respectively.
Over the last 30 days, the consensus estimate has moved north by 2.5% for 2018 and 2.3% for 2019 as most analysts have raised their estimates.
Brown & Brown has a favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Also, the company has an impressive Growth Score of A. Backtested results show that stocks with an impressive Style Score of A or B coupled with a bullish Zacks Rank offer the best investment bets.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Alleghany Corporation , The Navigators Group, Inc. and The Progressive Corporation (PGR - Free Report) .
Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. The company delivered positive surprises in three of the last four quarters, with an average beat of 17.61%. The stock sports Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Navigators Group underwrites marine, property and casualty plus professional liability insurance products and services in the United States and worldwide. The company came up with positive earnings surprises in three of the trailing four quarters, with an average beat of 14.66%. The stock caries Zacks Rank #2 (Buy).
Progressive Corporation provides personal and commercial auto insurance, residential property insurance and other specialty property-casualty insurance and related services, primarily in the United States. The company pulled off positive surprises in three of the last four quarters, with an average beat of 6.23%. The stock caries Zacks Rank #2 (Buy).
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Brown & Brown Hits 52-Week High: Will the Stock Rally Ahead?
Shares of Brown & Brown, Inc. (BRO - Free Report) hit a new 52-week high of $28.02 on May 22, gaining traction from strong first-quarter 2018 earnings and a recent buyout. About 0.6 million shares exchanged hands in the last trading session and the stock finally closed at $27.78. The company’s return on equity has been an impressive at 11.2% when compared with the industry average of 10.4%.
Solid Q1 Results
Brown & Brown's bottom line of 33 cents outpaced the Zacks Consensus Estimate by 13.8% and improved year over year on solid organic revenue growth, higher commissions and fees as well as low tax incidence.
Shares of the company have gained 3.8% since it posted strong first-quarter results, outperforming the industry’s increase of 0.6% over the same time frame. This Zacks Rank #3 (Hold) insurance broker flaunts a stellar surprise history, beating estimates for 10 straight quarters with an average beat of 7.9%.
Acquisition
Recently, Brown & Brown purchased almost all the assets of Automotive Development Group, LLC. This latest transaction will not only enable the acquirer to boost its presence but also its growth in the auto warranty and Finance and Insurance (F&I) training domain.
Why Should the Stock Continue the Bull Run?
Brown & Brown’s impressive growth is driven by organic and inorganic means across all segments.
Strategic efforts drove commission and fees pushed up revenues to witness a five-year CAGR of 8%. The company projects revenues to grow between $8 million and $11 million in 2018.
Brown & Brown has plans to implement a new annual incentive program for its middle-market producers in the Retail division, which has been created to pay for increased activities. The company anticipates this program to fuel growth in the future through focus on customer retention and new business. Core Commercial Program launched in collaboration with QBE will be licensed in all 50 states, mainly targeting the middle-market companies with annual premiums of $0.1 million and below. These initiatives will help the company achieve its guidance and ensure solid revenue generation.
Additionally, the company boasts a strong capital and liquidity position, which gives it financial flexibility as well as the power to engage in shareholder-friendly moves. Its dividend yield of 1.1% betters the industry average of 0.9%, thereby making it an attractive pick for yield-seeking investors.
The Zacks Consensus Estimate for 2018 reflects a 28.1% increase on 4% higher revenues. The consensus mark for revenues and earnings per share in 2019 translates into a year-over-year rise of 8.6% and 5.7% respectively.
Over the last 30 days, the consensus estimate has moved north by 2.5% for 2018 and 2.3% for 2019 as most analysts have raised their estimates.
Brown & Brown has a favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Also, the company has an impressive Growth Score of A. Backtested results show that stocks with an impressive Style Score of A or B coupled with a bullish Zacks Rank offer the best investment bets.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Alleghany Corporation , The Navigators Group, Inc. and The Progressive Corporation (PGR - Free Report) .
Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. The company delivered positive surprises in three of the last four quarters, with an average beat of 17.61%. The stock sports Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Navigators Group underwrites marine, property and casualty plus professional liability insurance products and services in the United States and worldwide. The company came up with positive earnings surprises in three of the trailing four quarters, with an average beat of 14.66%. The stock caries Zacks Rank #2 (Buy).
Progressive Corporation provides personal and commercial auto insurance, residential property insurance and other specialty property-casualty insurance and related services, primarily in the United States. The company pulled off positive surprises in three of the last four quarters, with an average beat of 6.23%. The stock caries Zacks Rank #2 (Buy).
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>