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What's in Store for Arthur J. Gallagher (AJG) in Q2 Earnings?
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Arthur J. Gallagher & Co. (AJG - Free Report) is slated to report second-quarter 2020 results on Jul 30, after market close. The company delivered earnings surprise in each of the last four quarters, the average being 5.10%.
Factors to Consider
Arthur J. Gallagher’s second-quarter results are likely to reflect strategic mergers and acquisitions, organic revenue growth and renewal rate increases.
Fees and commissions in the to-be reported quarter are likely to have benefited from new business production, renewal rate increases, strategic buyouts, and organic revenue growth. The Zacks Consensus Estimate for fees is pegged at $472 million, indicating an upside of 1.5% on a year-over-year basis. The consensus mark for commissions stands at $840 million, implying 8% growth.
Organic commission, fee, supplemental revenues as well as strategic mergers and acquisitions are likely to have fueled revenue increase in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is pegged at $1.64 billion, indicating an increase of 1.2% from the year-ago reported figure.
The effect of the COVID-19 pandemic lowered exposure growth, which is likely to have been offset by rate increases.
The company expects to reduce expense by $50 million to $75 million in the second quarter. Lower travel, entertainment and advertising expenses ($20 million to $25 million); technology, consulting and other professional fees ($10 million to $20 million); temporary labor and attrition ($10 million to $15 million) as well as lower utilization of health and welfare benefits of ($10 million to $15 million) are likely to have helped it achieve the target.
Foreign exchange is likely to drag down earnings per share by 1 cent.
The Zacks Consensus Estimate for second-quarter earnings per share stands at 72 cents per share, implying an increase of 10.8% from the year-ago quarter reported figure.
What the Zacks Model Says
Our proven model does not conclusively predict an earnings beat for Arthur J. Gallagher this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Earnings ESP: Arthur J. Gallagher has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at 72 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Sun Life Financial, Inc. (SLF - Free Report) has an Earnings ESP of +1.22% and a Zacks Rank of 3.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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What's in Store for Arthur J. Gallagher (AJG) in Q2 Earnings?
Arthur J. Gallagher & Co. (AJG - Free Report) is slated to report second-quarter 2020 results on Jul 30, after market close. The company delivered earnings surprise in each of the last four quarters, the average being 5.10%.
Factors to Consider
Arthur J. Gallagher’s second-quarter results are likely to reflect strategic mergers and acquisitions, organic revenue growth and renewal rate increases.
Fees and commissions in the to-be reported quarter are likely to have benefited from new business production, renewal rate increases, strategic buyouts, and organic revenue growth. The Zacks Consensus Estimate for fees is pegged at $472 million, indicating an upside of 1.5% on a year-over-year basis. The consensus mark for commissions stands at $840 million, implying 8% growth.
Organic commission, fee, supplemental revenues as well as strategic mergers and acquisitions are likely to have fueled revenue increase in the to-be-reported quarter. The Zacks Consensus Estimate for revenues is pegged at $1.64 billion, indicating an increase of 1.2% from the year-ago reported figure.
The effect of the COVID-19 pandemic lowered exposure growth, which is likely to have been offset by rate increases.
The company expects to reduce expense by $50 million to $75 million in the second quarter. Lower travel, entertainment and advertising expenses ($20 million to $25 million); technology, consulting and other professional fees ($10 million to $20 million); temporary labor and attrition ($10 million to $15 million) as well as lower utilization of health and welfare benefits of ($10 million to $15 million) are likely to have helped it achieve the target.
Foreign exchange is likely to drag down earnings per share by 1 cent.
The Zacks Consensus Estimate for second-quarter earnings per share stands at 72 cents per share, implying an increase of 10.8% from the year-ago quarter reported figure.
What the Zacks Model Says
Our proven model does not conclusively predict an earnings beat for Arthur J. Gallagher this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Earnings ESP: Arthur J. Gallagher has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are both pegged at 72 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Arthur J. Gallagher Co. Price and EPS Surprise
Arthur J. Gallagher Co. price-eps-surprise | Arthur J. Gallagher Co. Quote
Zacks Rank: Arthur J. Gallagher carries a Zacks Rank #3.
Stocks to Consider
Some stocks from the insurance industry with the apt combination of elements to surpass estimates this reporting cycle are as follows:
eHealth, Inc. (EHTH - Free Report) has an Earnings ESP of +10.81% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Marsh McLennan Companies, Inc. (MMC - Free Report) has an Earnings ESP of +3.95% and a Zacks Rank of 3.
Sun Life Financial, Inc. (SLF - Free Report) has an Earnings ESP of +1.22% and a Zacks Rank of 3.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>