Back to top

Image: Bigstock

Arthur J. Gallagher (AJG) to Report Q1 Earnings: What's Up?

Read MoreHide Full Article

Arthur J. Gallagher & Co. (AJG - Free Report) is slated to report first-quarter 2019 results on Apr 25, after market close. The company delivered positive earnings surprise in three of the last four quarters.

Let’s see how things are shaping up for this announcement.

Performance of Brokerage and Risk Management segments is likely to improve, driving overall performance in the to-be reported quarter. Organic sales as well as strategic mergers and acquisitions are expected aid performance. The Zacks Consensus Estimate for revenues is pegged at $1.95 billion, indicating an increase of 6.2% from the year-ago reported figure.

The Zacks Consensus Estimate for commissions and fees is pegged at $592 million, implying an increase of 18.4% from the year-ago reported figure.

The company expects stronger organic growth at its Brokerage segment. An expected increase in fees, commissions and supplemental plus contingent revenues are likely to aid the upside.

The Risk Management segment is expected to record growth and better margins in the to-be-reported quarter, boosted by a diversified product portfolio.

An improved interest rate environment is likely  to boost net investment income.

Expenses are likely to increase due to higher compensation and operating expenses.

The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.60 per share, suggesting an increase of 6.2% from the year-ago period reported figure.

What Our Quantitative Model Says

Our proven model does not conclusively show that Arthur J. Gallagher is likely to beat estimates this reporting cycle. This is because the stock does not have the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP:  Arthur J. Gallagher has an Earnings ESP of -0.36%. This is because the Most Accurate Estimate is pegged at $1.59, lower than the Zacks Consensus Estimate of $1.60. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Arthur J. Gallagher & Co. Price and EPS Surprise

Zacks Rank: Arthur J. Gallagher  has a Zacks Rank #3, which increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks from the insurance industry with the perfect mix of elements to surpass estimates this time around are as follows:

Willis Towers Watson Public Limited Company is set to report first-quarter earnings on May 1 and has an Earnings ESP of +0.71%. The company has 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 +5.08% and a Zacks Rank of 3. The company is set to release first-quarter earnings on May 1.

The Hartford Financial Services Group, Inc. (HIG - Free Report) has an Earnings ESP of +0.27% and a Zacks Rank #3. The company is slated to announce first-quarter earnings on May 1.

Is Your Investment Advisor Fumbling Your Financial Future?

See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”

Click to get it free >>

Published in