Arthur J. Gallagher & Co. AJG remains well-poised to gain from the solid performance of its Brokerage and Risk Management segments, diversified operations and effective capital deployment.

With a market capitalization of $71.31 billion, the average volume of shares traded in the last three months was 1.7 million.

The insurance broker currently closed at $285.50 and is trading above the 200-day simple moving average (SMA) of $273.45, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.

AJG’s Zacks Rank & Price Performance

Arthur J. Gallagher currently carries a Zacks Rank #3 (Hold). The stock has gained 24.1% in the past year, outperforming the industry and the Zacks Finance sector’s growth of 23.8% and 21.2%, respectively. The S&P 500 composite returned 24.8% in the same time frame.

AJG Price Performance

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AJG’s Growth Projection Encourages

The Zacks Consensus Estimate for Arthur J. Gallagher’s 2025 earnings per share and revenues indicates a year-over-year increase of 12% and 10.2%, respectively, from the corresponding 2024 estimates. 

Earnings of Arthur J. Gallagher grew 20.7% in the last five years, better than the industry average of 13.2%.

Impressive Earnings Surprise History of AJG

Arthur J. Gallagher’s bottom line surpassed earnings estimates in three of the last four quarters and matched in one, the average being 1.16%.

Factors Acting in Favor of AJG

The insurer remains focused on generating both organic (particularly international) and inorganic growth and is, thus, tapping into growth opportunities worldwide. This, coupled with solid retention and improving renewal premiums across all major geographies and most product lines, bodes well for growth. The insurer expects 2024 organic revenues and adjusted EBITDAC margins of the Risk Management and Brokerage segments to be better than the 2023 levels. 

In the Brokerage segment, AJG expects organic growth in the range of 7-9% in 2024. In the Risk Management segment, the company expects organic growth to be 9% and margins around 20.5% in 2024.

AJG’s revenues are geographically diversified with strong domestic and international operations. International contributes about one-third of revenues.
Given the number and size of its non-U.S. acquisitions, AJG expects international contribution to its total revenues to trend upward.

Its inorganic growth story is impressive. Since Jan. 1, 2002, the company has acquired 725 companies. AJG has a strong merger pipeline of more than 100 companies representing about $1.5 billion of annualized revenues. Of these 60 term sheets are signed or being prepared, representing about $700 million of annualized revenues.

Banking on its capital position, AJG distributes wealth to shareholders through dividend hikes and share repurchases. Its dividend has increased at a three-year CAGR of 7.7%.

However, Arthur J. Gallagher has been experiencing an increase in expenses due to higher compensation and operating expenses that have been eroding margins.

Key Picks

Investors interested in the insurance industry may look at some better-ranked players like The Travelers Companies, Inc. TRV, Brown & Brown, Inc. BRO and Palomar Holdings, Inc. PLMR. While The Travelers sports a Zacks Rank #1 (Strong Buy), Brown & Brown and Palomar Holdings carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for The Travelers’ 2025 earnings per share and revenues implies year-over-year growth of 9.1% and 7.4%, respectively. It beat earnings estimates in three of the past four quarters and missed in one, with an average surprise of 25.4%. In the past year, shares of TRV have rallied 25.7%.

The Zacks Consensus Estimate for Brown & Brown’s 2025 earnings per share and revenues implies year-over-year growth of 9.6% and 8.7%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 6.87%. In the past year, shares of BRO have rallied 40.6%.

The Zacks Consensus Estimate for Palomar Holdings’ 2025 earnings per share and revenues implies year-over-year growth of 23.1% and 27%, respectively. It beat earnings estimates in each of the past four quarters, with an average surprise of 14.9%. In the past year, shares of PLMR have rallied 86.8%.

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