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What Awaits Arthur J. Gallagher (AJG) This Earnings Season?

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Arthur J. Gallagher & Co. (AJG - Free Report) is slated to report fourth-quarter 2020 results on Jan 28, after market close. The company delivered earnings surprise in each of the last four quarters, the average being 15.79%.

Factors to Consider

Arthur J. Gallagher fourth-quarter results are expected to reflect lower interest income from U.S. operations, improved organic revenues, higher property and casualty rates.

Fees and commissions in the to-be reported quarter are likely to have benefited from revenues associated with acquisitions and organic change in base commissions and fee revenues. The Zacks Consensus Estimate for fees is pegged at $503 million, indicating an upside of 81.6% on a year-over-year basis. The consensus mark for commissions stands at $845 million, implying 6.6% growth.

Lower interest income from U.S. operations due to decreases in interest income earned on client held funds are likely to have affected the company’s net investment income in the to-be-reported quarter.

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 company expects to see increase in property and casualty rates in the to-be-reported quarter.

The company expects to witness improvement in fourth-quarter organic revenues in the Risk Management segment.

In the fourth quarter, the company expects savings in the range of $65 million to $70 million.

In the Brokerage segment, the company expects strong EBITDAC growth in the fourth quarter.

In the Risk Management segment also, the company expects improvement in EBITDAC due to expense savings in the to-be-reported quarter.

The Zacks Consensus Estimate for fourth-quarter earnings per share stands at 77 cents per share, implying an increase of 32.7% from the year-ago quarter reported figure.

What the Zacks Model Says

Our proven model predicts 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.

Earnings ESP: Arthur J. Gallagher has an Earnings ESP of +1.11%. This is because the Most Accurate Estimate of 78 cents is pegged higher than the Zacks Consensus Estimate of 77 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

Zacks Rank: Arthur J. Gallagher carries a Zacks Rank #3.  

Other Stocks to Consider  

Some other stocks from the insurance industry with the apt combination of elements to surpass estimates this reporting cycle are as follows:

Aon plc (AON - Free Report) has an Earnings ESP of +0.30% 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 +2.75% and a Zacks Rank of 3.

Willis Towers Watson Public Limited Company (WLTW - Free Report) has an Earnings ESP of +2.44% and a Zacks Rank of 3.

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