We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Should You Stay Invested in Arthur J. Gallagher (AJG)?
Read MoreHide Full Article
Strong-performing Brokerage and Risk Management segments, strategic buyouts to capitalize on growing market opportunities, effective capital deployment, growth projection and upbeat guidance make Arthur J. Gallagher & Co. (AJG - Free Report) worth retaining in one’s portfolio.
AJG, the largest property/casualty third-party claims administrator and the fourth-largest insurance broker globally based on revenues, has a stellar track record of beating estimates in the last 16 quarters.
Zacks Rank & Price Performance
AJG currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 0.4% against the industry’s decline of 10.3%.
Image Source: Zacks Investment Research
Optimistic Growth Projections
The Zacks Consensus Estimate for Arthur J. Gallagher’s 2022 earnings is pegged at $7.73, indicating an increase of 41.1% on 4% higher revenues of $8.4 billion. The consensus estimate for 2023 earnings is pegged at $8.63, indicating an increase of 11.6% on 10.6% higher revenues of $9.3 billion.
The long-term earnings growth rate is currently pegged at 10.2%.
Growth Drivers
Arthur J. Gallagher’s top line should continue to benefit from a sustained solid operational performance at its Brokerage and Risk Management segments. The insurance broker's concerted efforts to manage costs along with growing the top line are likely to favor margins.
Full-year 2022 EBITDAC margin is expected to remain close to 19%. In Brokerage, the insurance broker is poised to deliver around 10 to 20 basis points of full-year adjusted margin expansion.
AJG has an impressive inorganic growth story. The insurance broker closed 20 buyouts year to date and has quite a strong pipeline with about $250 million of revenues, associated with almost 40 term sheets, either agreed upon or being prepared. Arthur J. Gallagher estimates M&A capacity at more than $4 billion by the end of 2023.
Strong operational performance has been driving Arthur J. Gallagher’s cash flows. Thus, AJG expects to generate $125 million-$150 million in cash flow in 2022 and more in 2023.
Impressive Dividend History
Banking on stable cash flow, Arthur J. Gallagher has increased dividends at a seven-year CAGR (2016-2022) of 3.8%, with dividends currently yielding 1.1%. AJG also has a $1.5 billion share buyback program under its authorization.
The Zacks Consensus Estimate for Brown and Brown’s 2022 and 2023 earnings implies 5.9% and 10.3% year-over-year growth, respectively. The average four-quarter surprise is 7.54%.
The Zacks Consensus Estimate for BRO's 2022 and 2023 earnings has moved 1 cent north in the past 30 days. Year to date, shares of BRO have lost 6.9%.
The Zacks Consensus Estimate for Ryan Specialty’s 2022 and 2023 earnings implies 14.8% and 18.9% year-over-year growth, respectively. The average four-quarter surprise is 16.84%.
The Zacks Consensus Estimate for RYAN’s 2023 earnings has moved 1 cent north in the past 30 days. Year to date, shares of RYAN have lost 5.4%.
The Zacks Consensus Estimate for Brighthouse Financial’s 2022 and 2023 earnings has moved 17.3% and 3.6% north in the past 60 days, respectively. Year to date, shares of BHF have increased 21.5%.
The Zacks Consensus Estimate for BHF’s 2023 earnings implies 20.1% year-over-year growth. The average four-quarter surprise is 42.34%.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Shutterstock
Why Should You Stay Invested in Arthur J. Gallagher (AJG)?
Strong-performing Brokerage and Risk Management segments, strategic buyouts to capitalize on growing market opportunities, effective capital deployment, growth projection and upbeat guidance make Arthur J. Gallagher & Co. (AJG - Free Report) worth retaining in one’s portfolio.
AJG, the largest property/casualty third-party claims administrator and the fourth-largest insurance broker globally based on revenues, has a stellar track record of beating estimates in the last 16 quarters.
Zacks Rank & Price Performance
AJG currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 0.4% against the industry’s decline of 10.3%.
Image Source: Zacks Investment Research
Optimistic Growth Projections
The Zacks Consensus Estimate for Arthur J. Gallagher’s 2022 earnings is pegged at $7.73, indicating an increase of 41.1% on 4% higher revenues of $8.4 billion. The consensus estimate for 2023 earnings is pegged at $8.63, indicating an increase of 11.6% on 10.6% higher revenues of $9.3 billion.
The long-term earnings growth rate is currently pegged at 10.2%.
Growth Drivers
Arthur J. Gallagher’s top line should continue to benefit from a sustained solid operational performance at its Brokerage and Risk Management segments. The insurance broker's concerted efforts to manage costs along with growing the top line are likely to favor margins.
Full-year 2022 EBITDAC margin is expected to remain close to 19%. In Brokerage, the insurance broker is poised to deliver around 10 to 20 basis points of full-year adjusted margin expansion.
AJG has an impressive inorganic growth story. The insurance broker closed 20 buyouts year to date and has quite a strong pipeline with about $250 million of revenues, associated with almost 40 term sheets, either agreed upon or being prepared. Arthur J. Gallagher estimates M&A capacity at more than $4 billion by the end of 2023.
Strong operational performance has been driving Arthur J. Gallagher’s cash flows. Thus, AJG expects to generate $125 million-$150 million in cash flow in 2022 and more in 2023.
Impressive Dividend History
Banking on stable cash flow, Arthur J. Gallagher has increased dividends at a seven-year CAGR (2016-2022) of 3.8%, with dividends currently yielding 1.1%. AJG also has a $1.5 billion share buyback program under its authorization.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Brown and Brown ((BRO - Free Report) ), Ryan Specialty Holdings Inc. (RYAN - Free Report) and Brighthouse Financial (BHF - 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 Brown and Brown’s 2022 and 2023 earnings implies 5.9% and 10.3% year-over-year growth, respectively. The average four-quarter surprise is 7.54%.
The Zacks Consensus Estimate for BRO's 2022 and 2023 earnings has moved 1 cent north in the past 30 days. Year to date, shares of BRO have lost 6.9%.
The Zacks Consensus Estimate for Ryan Specialty’s 2022 and 2023 earnings implies 14.8% and 18.9% year-over-year growth, respectively. The average four-quarter surprise is 16.84%.
The Zacks Consensus Estimate for RYAN’s 2023 earnings has moved 1 cent north in the past 30 days. Year to date, shares of RYAN have lost 5.4%.
The Zacks Consensus Estimate for Brighthouse Financial’s 2022 and 2023 earnings has moved 17.3% and 3.6% north in the past 60 days, respectively. Year to date, shares of BHF have increased 21.5%.
The Zacks Consensus Estimate for BHF’s 2023 earnings implies 20.1% year-over-year growth. The average four-quarter surprise is 42.34%.