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Should You Retain Brown & Brown (BRO) Stock in Your Portfolio?
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Brown & Brown, Inc. (BRO - Free Report) is poised for growth on segmental outperformance, strategic acquisitions, a solid financial position and effective capital deployment.
Optimistic Growth Projections
The Zacks Consensus Estimate for BRO’s 2022 earnings is pegged at $2.28, indicating a 4.1% increase from the year-ago reported figure on 14% higher revenues of $3.4 billion. The consensus estimate for 2023 earnings is pegged at $2.56, indicating a 12% increase from the year-ago reported figure on 12.6% higher revenues of $3.9 billion.
Earnings Surprise History
BRO has a solid track record of beating earnings estimates in the last seven quarters.
Zacks Rank & Price Performance
Brown & Brown currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 14.1% against the industry’s decrease of 6.5%.
Image Source: Zacks Investment Research
Business Tailwinds
The brokerage insurer remains well poised for growth on the back of solid performance across its Retail and Wholesale Brokerage segments.
Riding on new businesses, better customer retention and premium rate increases across the majority of business lines, as well as acquisition activity, the operating segments should continue to generate increasing commissions and fees. This, in return, is likely to contribute to Brown & Brown’s overall revenues.
Revenues of Brown & Brown got a boost as a result of its focus on net new business growth and acquisitions. In 2021, it completed 19 acquisitions with annual revenues of approximately $132 million whereas in the first quarter of 2022, BRO completed two acquisitions with annual revenues of approximately $65 million.
Brown and Brown maintain a solid balance sheet with sufficient liquidity and low leverage. Its debt to capital of 44.9% was better than the industry average of 50.5%. A lesser debt burden relative to the industry is encouraging. The insurer exited first-quarter 2022 with cash and cash equivalents that surged more than two-fold from the 2021-end level.
The consensus estimate for 2023 earnings has moved 0.4% north in the past seven days, reflecting analysts’ optimism.
Solid Dividend History
Banking on strong capital and liquidity position, Brown & Brown has increased dividends at a five-year (2015 – 2022) CAGR of 6.3%, with a current dividend yield of 0.7%.
The Zacks Consensus Estimate for AJG’s 2022 and 2023 earnings has moved 0.1% and 0.2% north, respectively, in the past seven days. Arthur J Gallagher delivered a four-quarter average earnings surprise of 6.5%.
The Zacks Consensus Estimate for RYAN’s 2022 and 2023 earnings has moved 3.4% and 4.3% north in the past 30 days. Ryan Specialty delivered a four-quarter average earnings surprise of 19.7%.
The Zacks Consensus Estimate for CINF’s 2022 and 2023 earnings has moved 3.6% and 1.7% north, respectively, in the past 30 days. Cincinnati Financial delivered a four-quarter average earnings surprise of 32.5%.
In the past year, shares of AJG, RYAN and CINF have gained 13.1, 39.3% and 5.4%, respectively.
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Should You Retain Brown & Brown (BRO) Stock in Your Portfolio?
Brown & Brown, Inc. (BRO - Free Report) is poised for growth on segmental outperformance, strategic acquisitions, a solid financial position and effective capital deployment.
Optimistic Growth Projections
The Zacks Consensus Estimate for BRO’s 2022 earnings is pegged at $2.28, indicating a 4.1% increase from the year-ago reported figure on 14% higher revenues of $3.4 billion. The consensus estimate for 2023 earnings is pegged at $2.56, indicating a 12% increase from the year-ago reported figure on 12.6% higher revenues of $3.9 billion.
Earnings Surprise History
BRO has a solid track record of beating earnings estimates in the last seven quarters.
Zacks Rank & Price Performance
Brown & Brown currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 14.1% against the industry’s decrease of 6.5%.
Image Source: Zacks Investment Research
Business Tailwinds
The brokerage insurer remains well poised for growth on the back of solid performance across its Retail and Wholesale Brokerage segments.
Riding on new businesses, better customer retention and premium rate increases across the majority of business lines, as well as acquisition activity, the operating segments should continue to generate increasing commissions and fees. This, in return, is likely to contribute to Brown & Brown’s overall revenues.
Revenues of Brown & Brown got a boost as a result of its focus on net new business growth and acquisitions. In 2021, it completed 19 acquisitions with annual revenues of approximately $132 million whereas in the first quarter of 2022, BRO completed two acquisitions with annual revenues of approximately $65 million.
Brown and Brown maintain a solid balance sheet with sufficient liquidity and low leverage. Its debt to capital of 44.9% was better than the industry average of 50.5%. A lesser debt burden relative to the industry is encouraging. The insurer exited first-quarter 2022 with cash and cash equivalents that surged more than two-fold from the 2021-end level.
The consensus estimate for 2023 earnings has moved 0.4% north in the past seven days, reflecting analysts’ optimism.
Solid Dividend History
Banking on strong capital and liquidity position, Brown & Brown has increased dividends at a five-year (2015 – 2022) CAGR of 6.3%, with a current dividend yield of 0.7%.
Stocks to Consider
Some better-ranked insurers include Arthur J Gallagher & Co. (AJG - Free Report) , Ryan Specialty Group Holdings, Inc. (RYAN - Free Report) and Cincinnati Financial Corporation (CINF - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for AJG’s 2022 and 2023 earnings has moved 0.1% and 0.2% north, respectively, in the past seven days. Arthur J Gallagher delivered a four-quarter average earnings surprise of 6.5%.
The Zacks Consensus Estimate for RYAN’s 2022 and 2023 earnings has moved 3.4% and 4.3% north in the past 30 days. Ryan Specialty delivered a four-quarter average earnings surprise of 19.7%.
The Zacks Consensus Estimate for CINF’s 2022 and 2023 earnings has moved 3.6% and 1.7% north, respectively, in the past 30 days. Cincinnati Financial delivered a four-quarter average earnings surprise of 32.5%.
In the past year, shares of AJG, RYAN and CINF have gained 13.1, 39.3% and 5.4%, respectively.