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Brown & Brown Trades Below 50-Day SMA: How to Play the Stock?
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Key Takeaways
Brown & Brown has completed 702 acquisitions since 1993.
The company exited Q2 2025 with $8.9B in cash, over 13 times higher than 2024-end.
ROE of 15.1% and ROIC of 7.2% trail peers, signaling weaker use of shareholder funds.
Brown & Brown, Inc. (BRO - Free Report) has been trading below its 50-day simple moving average (SMA), signaling a short-term bearish trend. The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend.
BRO Shares Are Expensive
Shares of Brown & Brownare trading at a premium compared to the Zacks Brokerage industry. Its price-to-forward 12-month earnings of 20.88X is higher than the industry average of 18.69X, the Finance sector’s 16.9X and lower than the Zacks S&P 500 Composite’s 22.86X.
The insurer has a market capitalization of $31.4 billion. The average volume of shares traded in the last three months was 3.8 million.
Image Source: Zacks Investment Research
Shares of other insurers like Arthur J. Gallagher & Co. (AJG - Free Report) and Marsh & McLennan Companies, Inc. (MMC - Free Report) are also trading at a premium to the industry average, while shares of Willis Towers Watson Public Limited Company (WTW - Free Report) are trading at a discount to the industry average.
Price Performance of BRO
Shares of Brown & Brown have lost 6.5% compared with the industry’s decline of 13.8% in the year-to-date period. The Finance sector and the Zacks S&P 500 Composite have gained 10.8% and 9.6%, respectively, in the same time frame.
BRO vs Industry, Sector & S&P 500
Image Source: Zacks Investment Research
Average Target Price for BRO Suggests Upside
Based on short-term price targets offered by 13 analysts, the Zacks average price target is $111.77 per share. The average indicates a potential 17.5% upside from the last closing price.
Image Source: Zacks Investment Research
Projections for BRO
The Zacks Consensus Estimate for 2025 revenues is pegged at $5.8 billion, implying a year-over-year improvement of 21.5%. The consensus estimate for Brown & Brown’s current-year earnings is pegged at $4.13 per share, up 7.5% from the year-ago reported figure.
Key Points to Note for BRO
Supported by solid earnings, Brown & Brown has consistently expanded its capabilities through a blend of organic growth and acquisitions. Strategic buyouts have not only diversified its operations but also broadened its geographic reach. Since 1993, the company has completed more than 702 insurance intermediary acquisitions.
The Retail segment, contributing over 50% of total revenues, has posted consistent growth in recent years, fueled by higher core commissions and fees, profit-sharing contingent commissions, guaranteed supplemental commissions, and investment income. Continued momentum is expected, supported by growth across all business lines through strong new business, healthy retention, rate increases, and modest exposure unit expansion.
Improving new business, good retention as well as rate increases for most lines of coverage across property, general liability and professional liability should continue to drive revenues at Wholesale Brokerage.
Backed by sustained operational performance, Brown & Brown has maintained a strong liquidity position. The company exited the second quarter of 2025 with cash and cash equivalents of $8.9 billion, more than 13 times the level at the end of 2024. Infact, a solid capital and liquidity position enables BRO to distribute wealth to its shareholders. This insurance broker has a solid history of increasing dividends for the last 30 years at a five-year (2019-2024) CAGR of 8.7%.
The company’s trailing 12-month debt-to-capital ratio stood at 39.38, well below the industry average of 50.12, reflecting a conservative balance sheet and lower reliance on debt financing.
However, the company’s international expansion to the United Kingdom, Bermuda, and the Cayman Islands introduces additional complexities. Exposure to regulatory changes, currency fluctuations, and varying economic conditions, coupled with heightened competition for quality business, could pressure margins and operational efficiency.
Profitability metrics also lag industry levels. Brown & Brown’s return on equity is 15.1%, well below the industry average of 25.3%. Return on invested capital was 8.1% versus the industry’s 8.9%, while its trailing 12-month ROIC of 7.2% also trails the industry average of 8.7%, pointing to inefficiencies in utilizing shareholder funds.
Conclusion
Overall, Brown & Brown’s strong liquidity, conservative balance sheet, and disciplined acquisition strategy provide a stable growth foundation. However, international expansion risks, regulatory headwinds, and profitability pressures may temper its near-term performance.
Image: Bigstock
Brown & Brown Trades Below 50-Day SMA: How to Play the Stock?
Key Takeaways
Brown & Brown, Inc. (BRO - Free Report) has been trading below its 50-day simple moving average (SMA), signaling a short-term bearish trend. The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend.
BRO Shares Are Expensive
Shares of Brown & Brownare trading at a premium compared to the Zacks Brokerage industry. Its price-to-forward 12-month earnings of 20.88X is higher than the industry average of 18.69X, the Finance sector’s 16.9X and lower than the Zacks S&P 500 Composite’s 22.86X.
The insurer has a market capitalization of $31.4 billion. The average volume of shares traded in the last three months was 3.8 million.
Shares of other insurers like Arthur J. Gallagher & Co. (AJG - Free Report) and Marsh & McLennan Companies, Inc. (MMC - Free Report) are also trading at a premium to the industry average, while shares of Willis Towers Watson Public Limited Company (WTW - Free Report) are trading at a discount to the industry average.
Price Performance of BRO
Shares of Brown & Brown have lost 6.5% compared with the industry’s decline of 13.8% in the year-to-date period. The Finance sector and the Zacks S&P 500 Composite have gained 10.8% and 9.6%, respectively, in the same time frame.
BRO vs Industry, Sector & S&P 500
Average Target Price for BRO Suggests Upside
Based on short-term price targets offered by 13 analysts, the Zacks average price target is $111.77 per share. The average indicates a potential 17.5% upside from the last closing price.
Projections for BRO
The Zacks Consensus Estimate for 2025 revenues is pegged at $5.8 billion, implying a year-over-year improvement of 21.5%. The consensus estimate for Brown & Brown’s current-year earnings is pegged at $4.13 per share, up 7.5% from the year-ago reported figure.
Key Points to Note for BRO
Supported by solid earnings, Brown & Brown has consistently expanded its capabilities through a blend of organic growth and acquisitions. Strategic buyouts have not only diversified its operations but also broadened its geographic reach. Since 1993, the company has completed more than 702 insurance intermediary acquisitions.
The Retail segment, contributing over 50% of total revenues, has posted consistent growth in recent years, fueled by higher core commissions and fees, profit-sharing contingent commissions, guaranteed supplemental commissions, and investment income. Continued momentum is expected, supported by growth across all business lines through strong new business, healthy retention, rate increases, and modest exposure unit expansion.
Improving new business, good retention as well as rate increases for most lines of coverage across property, general liability and professional liability should continue to drive revenues at Wholesale Brokerage.
Backed by sustained operational performance, Brown & Brown has maintained a strong liquidity position. The company exited the second quarter of 2025 with cash and cash equivalents of $8.9 billion, more than 13 times the level at the end of 2024. Infact, a solid capital and liquidity position enables BRO to distribute wealth to its shareholders. This insurance broker has a solid history of increasing dividends for the last 30 years at a five-year (2019-2024) CAGR of 8.7%.
The company’s trailing 12-month debt-to-capital ratio stood at 39.38, well below the industry average of 50.12, reflecting a conservative balance sheet and lower reliance on debt financing.
However, the company’s international expansion to the United Kingdom, Bermuda, and the Cayman Islands introduces additional complexities. Exposure to regulatory changes, currency fluctuations, and varying economic conditions, coupled with heightened competition for quality business, could pressure margins and operational efficiency.
Profitability metrics also lag industry levels. Brown & Brown’s return on equity is 15.1%, well below the industry average of 25.3%. Return on invested capital was 8.1% versus the industry’s 8.9%, while its trailing 12-month ROIC of 7.2% also trails the industry average of 8.7%, pointing to inefficiencies in utilizing shareholder funds.
Conclusion
Overall, Brown & Brown’s strong liquidity, conservative balance sheet, and disciplined acquisition strategy provide a stable growth foundation. However, international expansion risks, regulatory headwinds, and profitability pressures may temper its near-term performance.
Given the balanced mix of strengths and headwinds, it is therefore wise to adopt a wait-and-see approach on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.