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Arthur J. Gallagher (AJG) Q3 Earnings Top Estimates, Up Y/Y
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Arthur J. Gallagher & Co. (AJG - Free Report) recently reported third-quarter 2017 adjusted net earnings of 81 cents per share, which beat the Zacks Consensus Estimate by about 3.8%. Also, the bottom line improved 5.2% on a year-over-year basis.
The company’s quarterly performance was driven by solid organic growth, outstanding revenue improvement from the tuck-in mergers and acquisitions (M&A) and a strong margin expansion. The company also witnessed a strong performance across all segments.
Net profit rose 2.9% year over year to 71 cents per share.
Operational Update
Total revenue was $1.6 billion, up 6.9% year over year. This upside was driven by growth in total adjusted revenue in the Brokerage, Risk Management as well as Corporate segments. Revenues top the Zacks Consensus Estimate by 1.8%.
Total commissions and fees earned increased 9.8% year over year to $1.1 billion in the quarter.
Arthur J. Gallagher’s total expense rose 7.2% year over year to $1.5 billion in the quarter. Expenses escalated due to a rise in compensation costs, operating costs, interest expenses, cost of revenues from clean coal activities, plus higher depreciation and amortization expenses as well as a change in estimated acquisition earnout payables.
Earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) increased 10.4% to $238.8 million.
Segment Results
Brokerage: Adjusted revenues of $953.1 million grew 7.9% year over year on higher commissions. Total expense shot up 8.7% year over year to $792.1 million.
Adjusted EBITDAC rose 8.1% to $266.2 million.
Risk Management: Adjusted revenues were up 12.7% year over year to $200.2 million owing to higher fees. Total expenses increased 11.1% year over year to $172.4 million.
Adjusted EBITDAC climbed 19.3% year over year to $35.8 million.
Corporate: Total revenue came in at $430.6 million, up 0.6% year over year. Total expense grew 3.9% year over year to $523.3 million.
EBITDAC was at a loss of $47.2 million, wider than a loss of $38.3 million in the prior-year quarter.
Financial Update
As of Sep 30, 2017, total assets were $12.8 billion, up 11.5% from $11.5 billion at year-end 2016.
Cash and cash equivalents at the end of the quarter increased 3.6% to $564.9 million from year-end 2016.
Shareholders’ equity increased about 14.1% from the 2016-end level to $4.2 billion at the end of the quarter.
Acquisition Update
In the third quarter, the company closed six acquisitions with annualized revenues of over $36.9 million.
Zacks Rank
Currently, Arthur J. Gallagher carries a Zacks Rank #4 (Sell).
Among other players from the insurance industry that have reported third-quarter earnings so far, the bottom lines of The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate.
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Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Arthur J. Gallagher (AJG) Q3 Earnings Top Estimates, Up Y/Y
Arthur J. Gallagher & Co. (AJG - Free Report) recently reported third-quarter 2017 adjusted net earnings of 81 cents per share, which beat the Zacks Consensus Estimate by about 3.8%. Also, the bottom line improved 5.2% on a year-over-year basis.
The company’s quarterly performance was driven by solid organic growth, outstanding revenue improvement from the tuck-in mergers and acquisitions (M&A) and a strong margin expansion. The company also witnessed a strong performance across all segments.
Net profit rose 2.9% year over year to 71 cents per share.
Operational Update
Total revenue was $1.6 billion, up 6.9% year over year. This upside was driven by growth in total adjusted revenue in the Brokerage, Risk Management as well as Corporate segments. Revenues top the Zacks Consensus Estimate by 1.8%.
Total commissions and fees earned increased 9.8% year over year to $1.1 billion in the quarter.
Arthur J. Gallagher’s total expense rose 7.2% year over year to $1.5 billion in the quarter. Expenses escalated due to a rise in compensation costs, operating costs, interest expenses, cost of revenues from clean coal activities, plus higher depreciation and amortization expenses as well as a change in estimated acquisition earnout payables.
Earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) increased 10.4% to $238.8 million.
Segment Results
Brokerage: Adjusted revenues of $953.1 million grew 7.9% year over year on higher commissions. Total expense shot up 8.7% year over year to $792.1 million.
Adjusted EBITDAC rose 8.1% to $266.2 million.
Risk Management: Adjusted revenues were up 12.7% year over year to $200.2 million owing to higher fees. Total expenses increased 11.1% year over year to $172.4 million.
Adjusted EBITDAC climbed 19.3% year over year to $35.8 million.
Corporate: Total revenue came in at $430.6 million, up 0.6% year over year. Total expense grew 3.9% year over year to $523.3 million.
EBITDAC was at a loss of $47.2 million, wider than a loss of $38.3 million in the prior-year quarter.
Financial Update
As of Sep 30, 2017, total assets were $12.8 billion, up 11.5% from $11.5 billion at year-end 2016.
Cash and cash equivalents at the end of the quarter increased 3.6% to $564.9 million from year-end 2016.
Shareholders’ equity increased about 14.1% from the 2016-end level to $4.2 billion at the end of the quarter.
Acquisition Update
In the third quarter, the company closed six acquisitions with annualized revenues of over $36.9 million.
Zacks Rank
Currently, Arthur J. Gallagher carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other players from the insurance industry that have reported third-quarter earnings so far, the bottom lines of The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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