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Should You Add Brown & Brown (BRO) Stock for Better Returns?
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Brown & Brown, Inc. (BRO - Free Report) is well poised for growth, banking on higher core commissions and fees, new business, solid retention, rate increases, strategic acquisitions, a strong financial position and effective capital deployment.
BRO’s total shareholder return has outperformed its peer group and the S&P 500 in the last five years. The 10-year average total shareholders' return was 399%.
Zacks Rank and Price Performance
Shares of this Zacks Rank #2 (Buy) insurance broker have rallied 23% year to date, outperforming the industry's growth of 8.5%, the Finance sector’s increase of 4.1% and the Zacks S&P 500 composite’s rise of 9.8%.
Image Source: Zacks Investment Research
Northbound Estimate Revision
The Zacks Consensus Estimate for BRO’s 2024 and 2025 bottom line has moved 0.1% north each in the past 30 days, reflecting investor optimism.
Optimistic Projections
The Zacks Consensus Estimate for BRO’s 2024 earnings per share is pegged at $3.51, indicating an increase of 24.9% from the year-ago reported figure on 9.2% higher revenues of $4.6 billion. The consensus estimate for 2025 earnings per share is pegged at $3.79, implying an increase of 8% on 6.2% higher revenues of $4.9 billion.
The expected long-term earnings growth is 10.1%, better than the industry average of 9.7%. Earnings have grown 18.4% in the past five years, better than the industry average of 13.2%
Growth Drivers
Increasing new business, strong retention and continued rate increases for most lines of coverage should continue to drive Brown and Brown’s commissions and fees. This, in turn, should drive the top line. The top line witnessed a five-year annual growth rate of 14%. The company met its intermediate annual revenue goal of $4 billion, doubling in the last five years.
The insurance broker intends to make consistent investments in boosting organic growth and margin expansion. It boasts an industry-leading adjusted EBITDAC margin.
Brown & Brown has an impressive inorganic growth story. Strategic buyouts help BRO to capitalize on growing market opportunities, strengthen its compelling products and service portfolio, expand global reach and accelerate its growth rate.
Backed by a sustained operational performance, Brown & Brown boasts a strong liquidity position and improved leverage ratio. The strength of its operating model and diversity of businesses ensure strong cash conversion. The company effectively deploys cash into acquisitions, capital expenditure and wealth distribution for shareholders via dividend increase.
Impressive Dividend History
BRO has a solid track of raising dividends for 30 straight years. Its five-year annualized dividend growth is 10.6% and its dividend yield is 0.6%
Allstate delivered a four-quarter average earnings surprise of 41.88%. The stock has gained 21.6% year to date. The Zacks Consensus Estimate for ALL’s 2024 and 2025 earnings indicates an increase of 1,479% and 13.8%, respectively.
Progressive delivered a four-quarter average earnings surprise of 4.99%. The stock has gained 34.1% year to date. The Zacks Consensus Estimate for PGR’s 2024 and 2025 earnings indicates an increase of 84.8% and 5.7%, respectively.
RLI delivered a four-quarter average earnings surprise of 132.49%. The stock has gained 9.6% year to date. The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings indicates an increase of 18% and 2.6%, respectively.
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Should You Add Brown & Brown (BRO) Stock for Better Returns?
Brown & Brown, Inc. (BRO - Free Report) is well poised for growth, banking on higher core commissions and fees, new business, solid retention, rate increases, strategic acquisitions, a strong financial position and effective capital deployment.
BRO’s total shareholder return has outperformed its peer group and the S&P 500 in the last five years. The 10-year average total shareholders' return was 399%.
Zacks Rank and Price Performance
Shares of this Zacks Rank #2 (Buy) insurance broker have rallied 23% year to date, outperforming the industry's growth of 8.5%, the Finance sector’s increase of 4.1% and the Zacks S&P 500 composite’s rise of 9.8%.
Image Source: Zacks Investment Research
Northbound Estimate Revision
The Zacks Consensus Estimate for BRO’s 2024 and 2025 bottom line has moved 0.1% north each in the past 30 days, reflecting investor optimism.
Optimistic Projections
The Zacks Consensus Estimate for BRO’s 2024 earnings per share is pegged at $3.51, indicating an increase of 24.9% from the year-ago reported figure on 9.2% higher revenues of $4.6 billion. The consensus estimate for 2025 earnings per share is pegged at $3.79, implying an increase of 8% on 6.2% higher revenues of $4.9 billion.
The expected long-term earnings growth is 10.1%, better than the industry average of 9.7%. Earnings have grown 18.4% in the past five years, better than the industry average of 13.2%
Growth Drivers
Increasing new business, strong retention and continued rate increases for most lines of coverage should continue to drive Brown and Brown’s commissions and fees. This, in turn, should drive the top line. The top line witnessed a five-year annual growth rate of 14%. The company met its intermediate annual revenue goal of $4 billion, doubling in the last five years.
The insurance broker intends to make consistent investments in boosting organic growth and margin expansion. It boasts an industry-leading adjusted EBITDAC margin.
Brown & Brown has an impressive inorganic growth story. Strategic buyouts help BRO to capitalize on growing market opportunities, strengthen its compelling products and service portfolio, expand global reach and accelerate its growth rate.
Backed by a sustained operational performance, Brown & Brown boasts a strong liquidity position and improved leverage ratio. The strength of its operating model and diversity of businesses ensure strong cash conversion. The company effectively deploys cash into acquisitions, capital expenditure and wealth distribution for shareholders via dividend increase.
Impressive Dividend History
BRO has a solid track of raising dividends for 30 straight years. Its five-year annualized dividend growth is 10.6% and its dividend yield is 0.6%
Other Stocks to Consider
Some other top-ranked stocks from the insurance space are The Allstate Corporation (ALL - Free Report) , The Progressive Corporation (PGR - Free Report) and RLI Corp (RLI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Allstate delivered a four-quarter average earnings surprise of 41.88%. The stock has gained 21.6% year to date. The Zacks Consensus Estimate for ALL’s 2024 and 2025 earnings indicates an increase of 1,479% and 13.8%, respectively.
Progressive delivered a four-quarter average earnings surprise of 4.99%. The stock has gained 34.1% year to date. The Zacks Consensus Estimate for PGR’s 2024 and 2025 earnings indicates an increase of 84.8% and 5.7%, respectively.
RLI delivered a four-quarter average earnings surprise of 132.49%. The stock has gained 9.6% year to date. The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings indicates an increase of 18% and 2.6%, respectively.