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What's in Store for Arthur J. Gallagher (AJG) in Q3 Earnings?
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Arthur J. Gallagher & Co. (AJG - Free Report) is slated to report third-quarter 2021 results on Oct 28, after market close. The company delivered an earnings surprise in each of the last four quarters, the average being 13.51%.
Factors to Consider
Arthur J. Gallagher’s third-quarter results are expected to reflect new business, improved rate, exposure growth and solid retentiongrowth in core health and welfare fee for service and retirement consulting business.
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 $552 million, indicating an increase of 11.3% from the prior-year period’s reported number. The consensus mark for commissions stands at $1 billion, implying 15.6% growth from the prior-year period’s reported number.
The property and casualty brokerage operations are likely to have benefited from new business, improved rate, exposure growth and solid retention.
The employee benefit brokerage and consulting business is likely to have been aided by growth in core health and welfare fee for service and retirement consulting business as economic recovery continues to drive business activity.
Given the rebound in employment, economic activity and solid new business, the company expects organic growth in Brokerage and Risk Management in the third quarter of 2021.
Decreases in interest income from U.S. operations due to a decline in interest rates 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, contingent revenues as well as strategic mergers and acquisitions are likely to have driven the top line in the to-be-reported quarter. The Zacks Consensus Estimate for third-quarter revenue stands at $2 billion, indicating an increase of 10.5% from the year-ago quarter’s reported figure.
Arthur J. Gallagher expects to incur $12-$14 million charge in the third quarter of 2021 in connection with the redemption of $650 million of debt. This should lead to interest and banking expense savings of $2-$3 million per quarter.
The Zacks Consensus Estimate for third-quarter earnings per share stands at $1.21 per share, indicating an increase of 12% 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 -2.34%. This is because the Most Accurate Estimate of $1.18 is pegged lower than the Zacks Consensus Estimate of $1.21. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
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What's in Store for Arthur J. Gallagher (AJG) in Q3 Earnings?
Arthur J. Gallagher & Co. (AJG - Free Report) is slated to report third-quarter 2021 results on Oct 28, after market close. The company delivered an earnings surprise in each of the last four quarters, the average being 13.51%.
Factors to Consider
Arthur J. Gallagher’s third-quarter results are expected to reflect new business, improved rate, exposure growth and solid retentiongrowth in core health and welfare fee for service and retirement consulting business.
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 $552 million, indicating an increase of 11.3% from the prior-year period’s reported number. The consensus mark for commissions stands at $1 billion, implying 15.6% growth from the prior-year period’s reported number.
The property and casualty brokerage operations are likely to have benefited from new business, improved rate, exposure growth and solid retention.
The employee benefit brokerage and consulting business is likely to have been aided by growth in core health and welfare fee for service and retirement consulting business as economic recovery continues to drive business activity.
Given the rebound in employment, economic activity and solid new business, the company expects organic growth in Brokerage and Risk Management in the third quarter of 2021.
Decreases in interest income from U.S. operations due to a decline in interest rates 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, contingent revenues as well as strategic mergers and acquisitions are likely to have driven the top line in the to-be-reported quarter. The Zacks Consensus Estimate for third-quarter revenue stands at $2 billion, indicating an increase of 10.5% from the year-ago quarter’s reported figure.
Arthur J. Gallagher expects to incur $12-$14 million charge in the third quarter of 2021 in connection with the redemption of $650 million of debt. This should lead to interest and banking expense savings of $2-$3 million per quarter.
The Zacks Consensus Estimate for third-quarter earnings per share stands at $1.21 per share, indicating an increase of 12% 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 -2.34%. This is because the Most Accurate Estimate of $1.18 is pegged lower than the Zacks Consensus Estimate of $1.21. 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 currently.
Stocks to Consider
Some stocks from the insurance industry with the apt combination of elements to surpass estimates this reporting cycle are as follows:
Cigna Corporation (CI - Free Report) has an Earnings ESP of +2.19% and a Zacks Rank of 3 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Hartford Financial (HIG - Free Report) has an Earnings ESP of +5.61% and is Zacks #3 Ranked, presently.
MetLife (MET - Free Report) has an Earnings ESP of +1.20% and is a #3 Ranked player, currently.