Shares of Brown & Brown, Inc. BRO have gained 33.3% in the past year, outperforming its industry, the Finance sector and the Zacks S&P 500 composite’s return.

Brown & Brown shares are trading well above the 200-day moving average, indicating a bullish trend.

The insurer has a market capitalization of $32.29 billion. The average volume of shares traded in the last three months was 1.79 million. Earnings have grown 21.5% in the past five years, better than the industry average of 15.2%. Brown & Brown's bottom line outpaced estimates in each of the trailing four quarters, the average surprise being 8.18%.

BRO Outperforms Industry, Sector & S&P 500 in One Year

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BRO Shares are Expensive

BRO shares are trading at a premium to the industry. Its price-to-forward 12-months earnings of 26.19X is higher than the industry average of 22.29X. Shares of other insurers like Assurant, Inc. AIZ and CNO Financial Group, Inc. CNO are trading at a multiple higher than the industry average, while shares of Radian Group Inc. RDN are trading at a multiple lower than the industry average.

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BRO’s Encouraging Growth Projection 

The Zacks Consensus Estimate for Brown & Brown’s 2025 earnings per share indicates a year-over-year increase of 9.1%. The consensus estimate for revenues is pegged at $5.21 billion, implying a year-over-year improvement of 8.3%. The consensus estimate for 2026 earnings per share and revenues indicates an increase of 9.6% and 8.3%, respectively, from the corresponding 2025 estimates. 

Optimistic Analyst Sentiment on BRO

Two of the seven analysts covering the stock have raised estimates for 2025, while one of the six has raised the same for 2026 over the past 30 days. Thus, the Zacks Consensus Estimate for 2024 and 2025 moved 0.2% and 0.2% north, respectively, in the last 30 days. 

Factors Impacting BRO 

Commissions and fees, the main component of the top line, benefit from increasing new business, strong retention and continued rate increases for most lines of coverage. The company met its intermediate annual revenue goal of $4 billion, doubling in the last five years.
The insurance broker continually makes investments in boosting organic growth and margin expansion. It has an industry-leading adjusted EBITDAC margin.

Brown & Brown’s strategic buyouts help it capitalize on growing market opportunities, strengthen its compelling products and service portfolio, expand global reach and accelerate its growth rate. The insurance broker completed 32 acquisitions during the year ended Dec. 31, 2024, and continued to build relationships with many other companies. From 1993 through 2024, the company acquired 674 insurance intermediary operations. The Quintes buyout was the largest transaction in 2024. 

Banking on operational expertise, BRO boasts a strong liquidity position with an improving leverage ratio. The strength of its operating model and diversity of businesses ensures strong cash conversion. The company effectively deploys cash into acquisitions, capital expenditure and wealth distribution for shareholders via dividend increases.

BRO has an impressive dividend history. The strong capital position enables Brown & Brown to distribute wealth to shareholders via dividend increases. To dividend payments, the company has increased dividends for the last 30 years at a five-year (2019-2024) CAGR of 8.7%.

Conclusion

New business, strong retention, rate increases, strategic buyouts and impressive dividend history poise the company well for growth. Favorable growth estimates and positive analyst sentiment are the other positives. A robust capital position over the years reflects its financial flexibility.

Thus, despite its premium valuation, this Zacks Rank #2 (Buy) stock remains one of investors’ favorites for addition to their portfolios. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report

Assurant, Inc. (AIZ) : Free Stock Analysis Report

Radian Group Inc. (RDN) : Free Stock Analysis Report

Brown & Brown, Inc. (BRO) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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