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Here's Why Hold Strategy is Appropriate for Brown & Brown (BRO)

Brown & Brown, Inc. BRO has been in investors’ good books owing to segmental performance, strong financial position, effective capital deployment and favorable growth estimates.

Optimistic Growth Projections

The Zacks Consensus Estimate for BRO’s 2023 earnings is pegged at $2.47, indicating an 8.3% increase from the year-ago reported figure on 12.1% higher revenues of $4 billion. The consensus estimate for 2023 earnings is pegged at $2.74, indicating an 11% increase from the year-ago reported figure on 6.4% higher revenues of $4.26 billion.

Earnings Surprise History

BRO has a solid track record of beating earnings estimates in six of the last seven quarters.

Zacks Rank & Price Performance

Brown & Brown currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 21.8% compared with the industry’s decrease of 5.6%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Business Tailwinds

The brokerage insurer remains well poised for growth on the back of solid performance across its Retail and Wholesale Brokerage segments.

Riding on new businesses, better customer retention and premium rate increases across the majority of business lines, as well as acquisition activity and the operating segments, should continue to generate increasing commissions and fees, which are likely to contribute to Brown & Brown’s overall revenues.

Brown & Brown and its subsidiaries continuously make strategic acquisitions to expand globally, add capabilities and boost operations. Also, these strategic buyouts help Brown & Brown increase commissions and fees, which, in turn, drive revenues.

Brown & Brown’s impressive growth is driven by organic and inorganic means across all segments.  BRO intends to make consistent investments to drive organic growth and margins. Its solid earnings have allowed the company to expand its capabilities, with the buyouts extending the company’s geographic footprint.

The strong capital and liquidity position enables Brown & Brown to enhance shareholder value via dividend increases and share buybacks. With respect to dividend payments, the company has increased dividends for the last 29 years at a five-year (2019-2023) CAGR of 7.5%.

Stocks to Consider

Some top-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited AXS, Everest Re Group, Ltd. RE and Kinsale Capital Group, Inc. KNSL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Axis Capital beat estimates in three of the last four quarters and missed in one, the average being 5.70%. The Zacks Consensus Estimate for 2023 and 2024 has moved 5% and 0.3%, north, respectively, in the past 60 days.

The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $7.50 and $8.50, indicating a year-over-year increase of 29% and 13.3%, respectively. In the past year, AXS has lost 10%.

Everest Re beat estimates in each of the last four quarters, the average being 18.41%.

The Zacks Consensus Estimate for RE’s 2023 and 2024 earnings per share is pegged at $45.63 and $53.02, indicating a year-over-year increase of 68.5% and 16.1%, respectively. In the past year, RE has gained 14.3%.

Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. In the past year, KNSL has gained 22.9%.

The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $9.86 and $11.85, indicating a year-over-year increase of 26.4% and 20.2%, respectively.

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Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report

Everest Re Group, Ltd. (RE) : Free Stock Analysis Report

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

Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report

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Zacks Investment Research