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Here's Why Brown & Brown (BRO) Stock is an Attractive Bet
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Brown & Brown, Inc. (BRO - Free Report) remains well poised for growth driven by organic and inorganic efforts, robust capital position and efficient capital deployment.
The company boasts an impressive growth record backed by organic and inorganic efforts. Strategic mergers and acquisitions have enabled it to expand its operations. In 2019, the company closed 23 transactions with approximately $105 million of annual revenues.
The company has acquired 500 insurance intermediary operations in more than two decades. It remains focused on making investments to drive organic growth and margin expansion. Its solid capital position has enabled it to widen its capabilities with acquisitions and extend its geographical presence.
Recently, there have been a number of acquisitions in the insurance brokerage industry, given the significant capital available. Arthur J. Gallagher & Co. (AJG - Free Report) acquired McConnell, Manit & Trout Insurance Services, LLC (MMT). Also, Aon plc (AON - Free Report) entered into an agreement to purchase Willis Towers Watson Public Limited Company , making it one of the mega deals of the insurance brokerage industry.
Banking on strong capital and liquidity position, the company deploys capital effectively via share repurchases and dividend hikes to enhance shareholder value. In October 2019, the company raised dividend by 6.25%, which marked the 26th yearly dividend hike. However, the company’s dividend yield of 0.8% compares unfavorably with the industry’s yield of 1.5%. At present, the company has $500 million under its authorization.
The company also has a decent history of beating estimates in each of the last four quarters with the average beat being 7.97%.
The life insurer’s interest coverage ratio of 9.2 compares favorably with the industry average of 6, which indicates its ability to adequately cover its interest obligations.
The Zacks Consensus Estimate for 2020 and 2021 earnings per share is pegged at $1.52 and $1.6, indicating increase of nearly 8.5% and 8.6%, respectively from the year-ago reported figure. The expected long-term earnings growth rate is 10%. It has a favorable Growth Score of B.
Shares of this Zacks Rank #2 (Buy) have gained 24.4% in a year’s time, outperforming the industry’s increase of 0.6%. The company’s efforts to ramp up growth and its solid capital position should continue to drive shares higher. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, rising expenses weigh on its bottom line. Also, a high debt level and lower return on equity continue to pose financial risk.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Here's Why Brown & Brown (BRO) Stock is an Attractive Bet
Brown & Brown, Inc. (BRO - Free Report) remains well poised for growth driven by organic and inorganic efforts, robust capital position and efficient capital deployment.
The company boasts an impressive growth record backed by organic and inorganic efforts. Strategic mergers and acquisitions have enabled it to expand its operations. In 2019, the company closed 23 transactions with approximately $105 million of annual revenues.
The company has acquired 500 insurance intermediary operations in more than two decades. It remains focused on making investments to drive organic growth and margin expansion. Its solid capital position has enabled it to widen its capabilities with acquisitions and extend its geographical presence.
Recently, there have been a number of acquisitions in the insurance brokerage industry, given the significant capital available. Arthur J. Gallagher & Co. (AJG - Free Report) acquired McConnell, Manit & Trout Insurance Services, LLC (MMT). Also, Aon plc (AON - Free Report) entered into an agreement to purchase Willis Towers Watson Public Limited Company , making it one of the mega deals of the insurance brokerage industry.
Banking on strong capital and liquidity position, the company deploys capital effectively via share repurchases and dividend hikes to enhance shareholder value. In October 2019, the company raised dividend by 6.25%, which marked the 26th yearly dividend hike. However, the company’s dividend yield of 0.8% compares unfavorably with the industry’s yield of 1.5%. At present, the company has $500 million under its authorization.
The company also has a decent history of beating estimates in each of the last four quarters with the average beat being 7.97%.
The life insurer’s interest coverage ratio of 9.2 compares favorably with the industry average of 6, which indicates its ability to adequately cover its interest obligations.
The Zacks Consensus Estimate for 2020 and 2021 earnings per share is pegged at $1.52 and $1.6, indicating increase of nearly 8.5% and 8.6%, respectively from the year-ago reported figure. The expected long-term earnings growth rate is 10%. It has a favorable Growth Score of B.
Shares of this Zacks Rank #2 (Buy) have gained 24.4% in a year’s time, outperforming the industry’s increase of 0.6%. The company’s efforts to ramp up growth and its solid capital position should continue to drive shares higher. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, rising expenses weigh on its bottom line. Also, a high debt level and lower return on equity continue to pose financial risk.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>