Back to top

Image: Bigstock

Brown & Brown Hits 52-Week High: Is Further Upside Left?

Read MoreHide Full Article

Shares of Brown & Brown, Inc. (BRO - Free Report) scaled a fresh 52-week high of $38.86 on Dec 13, eventually closing at the same price. The company’s agreement to acquire the assets of Special Risk Insurance Managers, Ltd. is likely to have contributed to this rally.

Over the past year, the Zacks Rank #3 (Hold) stock has gained 42.9%, outperforming the industry’s growth of 35.1%.

 

Let’s delve deeper and analyze the factors responsible for the stock’s upsurge.

Driving Factors

Last week, a unit of Brown & Brown agreed to acquire the assets of Special Risk Insurance Managers, Ltd. The acquisition, following the fulfillment of certain conditions, is expected to be completed on Jan 1, 2020.

The addition of Special Risk to the portfolio of Brown & Brown will strengthen the presence of the acquirer in the insurance brokerage market in Canada.

As far as Special Risk is concerned, the combination will provide it with major insurer opportunities, enhanced Lloyd’s relationships and innovative products for retail brokers.

Investors view positively the company’s disciplined focus on acquiring companies that are strategic fits. The insurer closed 18 transactions through the third quarter of 2019 with annualized revenues of $86 million.

Mergers and acquisitions are central to the company’s growth strategy, demonstrated by more than 500 agency buyouts so far. It remains focused on making investments to drive organic growth and margin expansion. Brown & Brown's solid earnings have enabled it to expand its capabilities with buyouts and extend its geographic footprint.

Stocks to Consider

Some better-ranked stocks from the same space are Fanhua Incorporation (FANH - Free Report) , eHealth (EHTH - Free Report) and Erie Indemnity Company (ERIE - Free Report) . While Fanhua sports a Zacks Rank #1 (Strong Buy), Erie Indemnity and eHealth carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fanhua distributes insurance products and provides property and casualty insurance, life insurance and participating insurance products in China. The company beat the Zacks Consensus Estimate in three of the last four reported quarters, the average beat being 13.44%.

eHealth operates through two segments and provides services like private health insurance exchange in the United States and China to families, individuals and small businesses. The company beat the Zacks Consensus Estimate in three of the last four reported quarters, the average beat being 161.74%.

Erie Indemnity provides sales, underwriting and policy issuance services on behalf of the Erie Insurance Exchange.  The company beat the Zacks Consensus Estimate in three of the last four reported quarters, the average beat being 4.90%.

Today's Best Stocks from Zacks

Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q3 2019, while the S&P 500 gained +39.6%, five of our strategies returned +51.8%, +57.5%, +96.9%, +119.0%, and even +158.9%.

This outperformance has not just been a recent phenomenon. From 2000 – Q3 2019, while the S&P averaged +5.6% per year, our top strategies averaged up to +54.1% per year.

See their latest picks free >>

Published in