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Arthur J. Gallagher Trades Below 50-Day SMA: How to Play the Stock?
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Key Takeaways
Arthur J. Gallagher posted 15% revenue CAGR from 2019-2024 with margin gains to 33.3%.
770 acquisitions since 2002 drive inorganic growth, with nine new deals adding $290M revenue.
Q2 2025 net margin slipped to 10.9% as rising expenses and debt pressured profitability.
Arthur J. Gallagher & Co. (AJG - 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.
Price Performance of AJG
Shares of AJG have gained 6.1% in the year-to-date period against the industry’s decline of 13.9%. The Finance sector and the Zacks S&P 500 Composite have increased 10.7% and 9.6%, respectively, in the same time frame.
The insurer has a market capitalization of $77.2 billion. The average volume of shares traded in the last three months was 1.5 million.
Image Source: Zacks Investment Research
AJG Shares Are Affordable
Shares of Arthur J. Gallagher are trading at a discount compared to the industry. Its price-to-book value of 3.35X is lower than the industry average of 4.31X.
Image Source: Zacks Investment Research
Shares of other insurers like Brown & Brown, Inc. (BRO - Free Report) and Willis Towers Watson Public Limited Company (WTW - Free Report) are also trading at a multiple lower than the industry average, while Marsh & McLennan Companies, Inc. (MMC - Free Report) is trading at a premium.
Projections for AJG
The Zacks Consensus Estimate for 2025 revenues is pegged at $13.7 billion, implying a year-over-year improvement of 20.8%. The consensus estimate for AJG’s current-year earnings is pegged at $10.98 per share, suggesting 8.8% growth from the year-ago reported figure.
The consensus estimate for 2026 earnings per share and revenues indicates year-over-year increases of 23% and 22.8%, respectively.
Average Target Price for AJG Suggests Upside
Based on short-term price targets offered by 16 analysts, the Zacks average price target is $338.19 per share. The average indicates a potential 14.8% upside from the last closing price.
Image Source: Zacks Investment Research
Bearish Analyst Sentiment on AJG
Analysts covering the stock have lowered estimates for 2025 over the past seven days as well as the past 30 days. The Zacks Consensus Estimate for 2025 earnings has moved down 0.2% in the past seven days, and the same for 30 days has edged down 0.1%.
Image Source: Zacks Investment Research
Key Points to Note for AJG
Arthur J. Gallagher is on track to deliver both organic growth and inorganic growth through strategic acquisitions. Backed by strong operations, high client retention, and rising renewal premiums across key markets, its global focus positions the company for sustained expansion.
AJG’s revenues increased at a 15% CAGR from 2019 to 2024, with EBITDAC rising 20% CAGR and margins expanding 640 bps to 33.3%. The growing contribution from Arthur J. Gallagher’s Brokerage and Risk Management segments is fueling organic revenue growth. AJG generates 88% of its revenues from the Brokerage segment and 12% from its Risk Management segment. Arthur J. Gallagher expects 2025 organic growth of 6%–8% in both the Brokerage and Risk Management segments, with an adjusted EBITDAC margin of 20.5%.
Arthur J. Gallagher’s inorganic growth story is impressive, marked by 770 acquisitions since 2002, all recorded under the acquisition method. In 2025 alone, revenue growth from acquisitions has ranged from 5% to 17.5%, with nine new mergers completed in the second quarter contributing roughly $290 million in annualized revenues, underscoring its consistent expansion through strategic deals.
International operations currently contribute about one-third of Arthur J. Gallagher’s revenues, reflecting its broad geographic diversification. With the growing scale and frequency of non-U.S. acquisitions, the company expects the international share of revenues to increase further.
However, escalating expenses from higher compensation, depreciation, amortization, and operating costs have started to weigh on Arthur J. Gallagher’s profitability. In the second quarter of 2025, net earnings margin (before reimbursements) declined 246 basis points year over year to 10.9% from 13.3%.
The company’s debt level has risen over the years, driving higher interest expenses, with total debt reaching $13 billion as of June 30, 2025. While its debt-to-capital ratio of 35.87 compares favorably with the industry’s 50.12, its times interest earned of 5.07 lags the industry average of 6.1.
Weak profitability metrics are evident, with return on equity falling to 13.2% in the second quarter of 2025, down 610 bps year over year, highlighting inefficiency in using shareholders’ funds. The trailing 12-month return on invested capital of 7.3% also lags the industry average of 8.7%.
Wealth Distribution of AJG
Arthur J. Gallagher continues to emphasize shareholder value creation through steady capital returns. The company has raised its dividend five times in the past five years, delivering a five-year annualized growth of 7.9%, with a current payout ratio of 25%. Management may also consider share repurchases in 2025 if excess cash remains after funding acquisition opportunities.
Conclusion
Arthur J. Gallagher’s strong global franchise, resilient client retention, and steady flow of strategic acquisitions continue to provide a durable platform for growth in the insurance brokerage and risk management space. The company’s balanced revenue mix and recurring cash flows reinforce its long-term potential. However, headwinds from escalating expenses, elevated debt levels, and weaker return metrics are beginning to weigh on profitability, tempering near-term performance.
Image: Bigstock
Arthur J. Gallagher Trades Below 50-Day SMA: How to Play the Stock?
Key Takeaways
Arthur J. Gallagher & Co. (AJG - 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.
Price Performance of AJG
Shares of AJG have gained 6.1% in the year-to-date period against the industry’s decline of 13.9%. The Finance sector and the Zacks S&P 500 Composite have increased 10.7% and 9.6%, respectively, in the same time frame.
The insurer has a market capitalization of $77.2 billion. The average volume of shares traded in the last three months was 1.5 million.
AJG Shares Are Affordable
Shares of Arthur J. Gallagher are trading at a discount compared to the industry. Its price-to-book value of 3.35X is lower than the industry average of 4.31X.
Shares of other insurers like Brown & Brown, Inc. (BRO - Free Report) and Willis Towers Watson Public Limited Company (WTW - Free Report) are also trading at a multiple lower than the industry average, while Marsh & McLennan Companies, Inc. (MMC - Free Report) is trading at a premium.
Projections for AJG
The Zacks Consensus Estimate for 2025 revenues is pegged at $13.7 billion, implying a year-over-year improvement of 20.8%. The consensus estimate for AJG’s current-year earnings is pegged at $10.98 per share, suggesting 8.8% growth from the year-ago reported figure.
The consensus estimate for 2026 earnings per share and revenues indicates year-over-year increases of 23% and 22.8%, respectively.
Average Target Price for AJG Suggests Upside
Based on short-term price targets offered by 16 analysts, the Zacks average price target is $338.19 per share. The average indicates a potential 14.8% upside from the last closing price.
Bearish Analyst Sentiment on AJG
Analysts covering the stock have lowered estimates for 2025 over the past seven days as well as the past 30 days. The Zacks Consensus Estimate for 2025 earnings has moved down 0.2% in the past seven days, and the same for 30 days has edged down 0.1%.
Key Points to Note for AJG
Arthur J. Gallagher is on track to deliver both organic growth and inorganic growth through strategic acquisitions. Backed by strong operations, high client retention, and rising renewal premiums across key markets, its global focus positions the company for sustained expansion.
AJG’s revenues increased at a 15% CAGR from 2019 to 2024, with EBITDAC rising 20% CAGR and margins expanding 640 bps to 33.3%. The growing contribution from Arthur J. Gallagher’s Brokerage and Risk Management segments is fueling organic revenue growth. AJG generates 88% of its revenues from the Brokerage segment and 12% from its Risk Management segment. Arthur J. Gallagher expects 2025 organic growth of 6%–8% in both the Brokerage and Risk Management segments, with an adjusted EBITDAC margin of 20.5%.
Arthur J. Gallagher’s inorganic growth story is impressive, marked by 770 acquisitions since 2002, all recorded under the acquisition method. In 2025 alone, revenue growth from acquisitions has ranged from 5% to 17.5%, with nine new mergers completed in the second quarter contributing roughly $290 million in annualized revenues, underscoring its consistent expansion through strategic deals.
International operations currently contribute about one-third of Arthur J. Gallagher’s revenues, reflecting its broad geographic diversification. With the growing scale and frequency of non-U.S. acquisitions, the company expects the international share of revenues to increase further.
However, escalating expenses from higher compensation, depreciation, amortization, and operating costs have started to weigh on Arthur J. Gallagher’s profitability. In the second quarter of 2025, net earnings margin (before reimbursements) declined 246 basis points year over year to 10.9% from 13.3%.
The company’s debt level has risen over the years, driving higher interest expenses, with total debt reaching $13 billion as of June 30, 2025. While its debt-to-capital ratio of 35.87 compares favorably with the industry’s 50.12, its times interest earned of 5.07 lags the industry average of 6.1.
Weak profitability metrics are evident, with return on equity falling to 13.2% in the second quarter of 2025, down 610 bps year over year, highlighting inefficiency in using shareholders’ funds. The trailing 12-month return on invested capital of 7.3% also lags the industry average of 8.7%.
Wealth Distribution of AJG
Arthur J. Gallagher continues to emphasize shareholder value creation through steady capital returns. The company has raised its dividend five times in the past five years, delivering a five-year annualized growth of 7.9%, with a current payout ratio of 25%. Management may also consider share repurchases in 2025 if excess cash remains after funding acquisition opportunities.
Conclusion
Arthur J. Gallagher’s strong global franchise, resilient client retention, and steady flow of strategic acquisitions continue to provide a durable platform for growth in the insurance brokerage and risk management space. The company’s balanced revenue mix and recurring cash flows reinforce its long-term potential. However, headwinds from escalating expenses, elevated debt levels, and weaker return metrics are beginning to weigh on profitability, tempering near-term performance.
Given the bearish analyst sentiments and unfavorable ROIC, 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.