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Arthur J. Gallagher (AJG) to Post Q3 Earnings: What's in Store?
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Arthur J. Gallagher & Co. (AJG - Free Report) is slated to report third-quarter 2022 earnings on Oct 27, after market close. The insurer delivered an earnings surprise in each of the last four reported quarters, the average being 4.48%.
Factors to Consider
New business, strong retention and renewal premium increases across its business lines are likely to have aided Arthur J. Gallagher’s third-quarter results.
Revenues associated with acquisitions, organic revenue growth, organic change in base commission and fee revenues are likely to have favored commission and fee revenues in the third quarter of 2022. The Zacks Consensus Estimate for fees is pegged at $662 million, indicating an increase of 10.5% from the prior-year period’s reported number. The consensus mark for commissions stands at $1.2 billion, implying 19% growth from the prior-year period’s reported number.
We expect third quarter fees to increase 3.4% to $622.1 million and commission to increase about 12% to $1.1 billion
The employee benefit brokerage and consulting business is likely to have been aided by improving domestic labor market conditions.
Arthur J. Gallagher estimates organic revenue growth from existing clients, growing claim counts and new business to have favored Brokerage and Risk Management segments. AJG estimates organic growth in the Brokerage segment to be around 8%, while the same is expected to be about 10% in the Risk Management segment.
Improved interest rates, driving investment income from U.S. operations, and increases in income from partially-owned entities accounted for using the equity method are likely to have benefited net investment income. We expect investment income to increase 7.5% to $22.4 million. The Zacks Consensus Estimate for net investment income is pegged at $22.5 million.
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 revenues stands at $2.04 billion, indicating a decrease of 3% from the year-ago quarter’s reported figure. We expect revenues to decline 1.8% to $2.1 billion.
Total expenses are likely to have increased mainly due to higher compensation and operating cost, higher cost of revenues from clean coal activities, increased amortization and change in estimated acquisition earnout payables. We expect total expense of $1.8 billion in the to be reported quarter.
The Zacks Consensus Estimate for third-quarter earnings per share stands at $1.67, indicating an increase of 25.6% from the year-ago quarter reported figure. We expect bottom line to increase 27.6% to $1.70 per share.
What the Zacks Model Says
Our proven model does not conclusively predict an earnings beat for Arthur J. Gallagher this time around. This is because a stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) that increases the odds of an earnings beat. This is not the case as you can see below
Earnings ESP: Arthur J. Gallagher has an Earnings ESP of -0.19%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:
Brown & Brown (BRO - Free Report) has an Earnings ESP of +0.99% and a Zacks Rank of 3. The Zacks Consensus Estimate for third-quarter 2022 earnings is pegged at 60 cents, indicating an increase of 3.5% from the year-ago reported figure.
BRO’s earnings beat estimates in the last four reported quarters.
EverQuote (EVER - Free Report) has an Earnings ESP of +6.10% and a Zacks Rank #2. The Zacks Consensus Estimate for third-quarter 2022 earnings is pegged at a loss of 41 cents per share, wider than the year-ago loss of 18 cents.
EVER’s earnings beat estimates in three of the last four reported quarters, while missing in one.
NMI Holdings (NMIH - Free Report) has an Earnings ESP of +2.44% and a Zacks Rank of 3. The Zacks Consensus Estimate for third-quarter 2022 earnings is pegged at 82 cents, indicating an increase of 15.5% from the year-ago reported figure.
NMIH’s earnings beat estimates in the last four reported quarters.
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Arthur J. Gallagher (AJG) to Post Q3 Earnings: What's in Store?
Arthur J. Gallagher & Co. (AJG - Free Report) is slated to report third-quarter 2022 earnings on Oct 27, after market close. The insurer delivered an earnings surprise in each of the last four reported quarters, the average being 4.48%.
Factors to Consider
New business, strong retention and renewal premium increases across its business lines are likely to have aided Arthur J. Gallagher’s third-quarter results.
Revenues associated with acquisitions, organic revenue growth, organic change in base commission and fee revenues are likely to have favored commission and fee revenues in the third quarter of 2022. The Zacks Consensus Estimate for fees is pegged at $662 million, indicating an increase of 10.5% from the prior-year period’s reported number. The consensus mark for commissions stands at $1.2 billion, implying 19% growth from the prior-year period’s reported number.
We expect third quarter fees to increase 3.4% to $622.1 million and commission to increase about 12% to $1.1 billion
The employee benefit brokerage and consulting business is likely to have been aided by improving domestic labor market conditions.
Arthur J. Gallagher estimates organic revenue growth from existing clients, growing claim counts and new business to have favored Brokerage and Risk Management segments. AJG estimates organic growth in the Brokerage segment to be around 8%, while the same is expected to be about 10% in the Risk Management segment.
Improved interest rates, driving investment income from U.S. operations, and increases in income from partially-owned entities accounted for using the equity method are likely to have benefited net investment income. We expect investment income to increase 7.5% to $22.4 million. The Zacks Consensus Estimate for net investment income is pegged at $22.5 million.
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 revenues stands at $2.04 billion, indicating a decrease of 3% from the year-ago quarter’s reported figure. We expect revenues to decline 1.8% to $2.1 billion.
Total expenses are likely to have increased mainly due to higher compensation and operating cost, higher cost of revenues from clean coal activities, increased amortization and change in estimated acquisition earnout payables. We expect total expense of $1.8 billion in the to be reported quarter.
The Zacks Consensus Estimate for third-quarter earnings per share stands at $1.67, indicating an increase of 25.6% from the year-ago quarter reported figure. We expect bottom line to increase 27.6% to $1.70 per share.
What the Zacks Model Says
Our proven model does not conclusively predict an earnings beat for Arthur J. Gallagher this time around. This is because a stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) that increases the odds of an earnings beat. This is not the case as you can see below
Earnings ESP: Arthur J. Gallagher has an Earnings ESP of -0.19%. 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. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Some insurance stocks with the right combination of elements to come up with an earnings beat this time around are:
Brown & Brown (BRO - Free Report) has an Earnings ESP of +0.99% and a Zacks Rank of 3. The Zacks Consensus Estimate for third-quarter 2022 earnings is pegged at 60 cents, indicating an increase of 3.5% from the year-ago reported figure.
BRO’s earnings beat estimates in the last four reported quarters.
EverQuote (EVER - Free Report) has an Earnings ESP of +6.10% and a Zacks Rank #2. The Zacks Consensus Estimate for third-quarter 2022 earnings is pegged at a loss of 41 cents per share, wider than the year-ago loss of 18 cents.
EVER’s earnings beat estimates in three of the last four reported quarters, while missing in one.
NMI Holdings (NMIH - Free Report) has an Earnings ESP of +2.44% and a Zacks Rank of 3. The Zacks Consensus Estimate for third-quarter 2022 earnings is pegged at 82 cents, indicating an increase of 15.5% from the year-ago reported figure.
NMIH’s earnings beat estimates in the last four reported quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.