On Sep 26, 2016, we issued an updated research report on Brown & Brown Inc. (BRO - Analyst Report) .
Brown & Brown has an impressive inorganic story with strategic acquisitions enhancing its product portfolio. This month, one of the subsidiaries of the company acquired the assets of Kronholm Insurance Services, Inc. to boost its legal professional liability. The insurer acquired five companies with annualized revenues of $49 million in the first half of 2016. Strategic acquisitions and mergers also help it widen its operations.
With respect to organic growth, Brown & Brown has been eyeing a diverse offering of national programs to deliver balanced growth. The company remains on track with its organic growth initiatives.
Driven by these positives, commission and fees have increased at a five-year CAGR of 11.4%.
Also, continued solid operational performance has been supporting Brown & Brown’s sturdy capital position. This, is turn, has been helping it to engage in shareholder friendly moves that make it an attractive pick for yield seeking investors.
However, escalating expenses, has been weighing on margin expansion. Also, the introduction of a new long-term stock incentive program in 2016 will lead to non-cash stock-based compensation between $23 million and $26 million in the year.
In the absence of any near-term catalysts, the Zacks Consensus Estimate for 2016 has remained unchanged over the last 60 days. However, it moved south by a cent for 2017. The expected long-term earnings growth for the company is pegged at 9%.
Stocks to Consider
Some better-ranked insurers are National Interstate Corporation (NATL - Snapshot Report) , Erie Indemnity Company (ERIE - Snapshot Report) and Everest Re Group Ltd. (RE - Analyst Report) . While National Interstate and Erie Indemnity sport Zacks Rank #1 (Strong Buy), Everest Re carries Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..
Erie Indemnity, which provides sales, underwriting, and policy issuance services for the policyholders on behalf of the Erie Insurance Exchange, has seen the Zacks Consensus Estimate for moving up by 3.6% for 2016 and by 4.5% for 2017.
National Interstate, a specialty P&C insurance provider, has witnessed the Zacks Consensus Estimate moving up by 7.6% for 2016 and for 2017 by 7.3%.
Everest Re, a provider of reinsurance and insurance products, has witnessed upward revision in the Zacks Consensus Estimate by 4.2% and 0.6% for 2016 and 2017, respectively over the last 60 days.
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