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Brown & Brown Scales 52-Week High on Strong Q3 Results

BRO FAF Y ACGL

Trades from $3

On Nov 22, 2016, shares of Brown & Brown Inc. (BRO - Free Report) scaled a new 52-week high of $42.69. The upside was driven by the company’s strong third-quarter 2016 results. About 0.7 million shares exchanged hands in the last trading session and the stock finally closed at $42.64, up 0.85%. Year to date, the stock has returned 32.8%, which is substantially above 7.8% returned by the S&P 500.

Brown & Brown’s third-quarter operating earnings of 52 cents per share surpassed the Zacks Consensus Estimate by 6.1% and improved 10.6% year over year on higher revenues. This Zacks Rank #3 (Hold) insurance broker delivered positive surprises in the last four quarters with an average beat of 9.3%.

Revenues improved on higher commissions and fees. Each of the segments contributed to the increase.

Brown & Brown’s strengthened its balance sheet with increased cash balance and lowered debt level at the quarter end. .A sustained strong operational performance helped the insurance broker increase its annual dividend by 10.2%. The latest increase marks 23rd straight hike by the company.

Brown & Brown’s impressive growth is driven by organic and inorganic means across all its segments. Its strong operational performance has helped it generate solid cash flows. This provides the company sufficient free cash flow for strategic initiatives and shareholder-friendly moves. The insurance broker has $375 million remaining under its share repurchase authorization. Collectively, these should help the company to continue posting solid results over the longer term. The expected long-term earnings growth is 9%.

The Zacks Consensus Estimate increased by a cent over the last 30 days and is currently pegged at $1.83 for 2016. The same translate into a year-over-year increase of 7.2%.

Stocks to Consider

Some better-ranked insurers are Alleghany Corporation (Y - Free Report) , First American Financial Corporation (FAF - Free Report) and Arch Capital Group Ltd. (ACGL - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Alleghany Corporation deals with property & casualty reinsurance and insurance businesses in the U.S. and internationally. The company delivered positive surprises in three of the last four quarters, with an average beat of 20.52%.

First American Financial, a leading provider of title insurance and settlement services to the real estate and mortgage industries in the U.S., beat estimates in all the trailing four quarters, with an average beat of 14.32%.

Arch Capital offers property, casualty, and mortgage insurance and reinsurance products worldwide. It delivered positive surprises in all of the last four quarters, with an average beat of 9.27%.

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