Yahoo Finance Here's Why Should You Retain Arthur J. Gallagher (AJG) Stock
Arthur J. Gallagher AJG stock is worth retaining in one’s portfolio courtesy of the solid performance of the Brokerage and Risk Management segments, strategic buyouts to capitalize on growing market opportunities, effective capital deployment and upbeat guidance.
This Zacks Rank #3 (Hold) insurance broker has a stellar track record of beating estimates in the last 18 quarters. Earnings increased 19.9% over the last five years, better than the industry average of 11.4%.
Price Performance
AJG shares have gained 5.2% year to date, outperforming the industry increase of 3%.
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Growth Estimates
The Zacks Consensus Estimate for Arthur J. Gallagher’s 2023 earnings is pegged at $8.71, indicating an increase of 12.5% on 12.5% higher revenues of $9.5 billion. The consensus estimate for 2023 earnings is pegged at $9.77, indicating an increase of 12.2% on 10.1% higher revenues of $10.4 billion.
The long-term earnings growth rate is currently pegged at 11.2%, better than the industry average of 10.7%.
We estimate the bottom line to increase at a five-year (2021-2025) CAGR of 9.8%.
Growth Drivers
A sustained solid operational performance at its Brokerage and Risk Management segments should continue to drive the top line of this largest property/casualty third-party claims administrator and the fourth-largest insurance broker globally based on revenues. We estimate the top line to increase at a five-year (2021-2025) CAGR of 6.8%. AJG estimates organic revenue growth of about 10% in 2023.
While we project revenues at Brokerage to increase at a five-year (2021-2025) CAGR of 11.2%, Risk Management revenues are expected to be up 1.6% over the same time frame.
AJG has an impressive inorganic growth story. The insurance broker has quite a strong pipeline with about $300 million of revenues, associated with almost 45 term sheets, either agreed upon or being prepared. AJG estimates M&A capacity of more than $3 billion through 2023.
Though we expect expenses to increase 1.5% in 2023, adjusted net margin is projected to expand 70 basis points.
AJG expects a strong 2023 performance, given a sturdy organic outlook, margin expansion opportunities and an impressive M&A pipeline.
Impressive Dividend History
Banking on its sturdy operational performance, AJG expects to generate solid cash flow in 2023. Arthur J. Gallagher increased dividends at a four-year CAGR (2020-2023) of 5.1%, with dividends currently yielding 1.1%, almost in line with the industry average. AJG also has $1.5 billion share buyback authorization remaining.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Brighthouse Financial BHF, Sun Life Financial SLF and Voya Financial VOYA.
Brighthouse Financial delivered a four-quarter average earnings surprise of 2.07%. Year to date, BHF has lost 16.9%. BHF sports a Zacks Rank #1 (Strong Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BHF’s 2023 and 2024 earnings implies year-over-year increases of 32.9% and 11.4%, respectively.
Sun Life Financial delivered a four-quarter average earnings surprise of 9.14%. Year to date, SLF has risen 1.4%. It carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for SLF’s 2024 earnings indicates a respective year-over-year increase of 8.2%.
Voya Financial delivered a four-quarter average earnings surprise of 38.68%. Year to date, the insurer has gained 16.6%. It carries a Zacks Rank #2
The Zacks Consensus Estimate for VOYA’s 2023 and 2024 earnings indicates a respective year-over-year increase of 7.3% and 13%.
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Arthur J. Gallagher & Co. (AJG) : Free Stock Analysis Report
Sun Life Financial Inc. (SLF) : Free Stock Analysis Report
Voya Financial, Inc. (VOYA) : Free Stock Analysis Report
Brighthouse Financial, Inc. (BHF) : Free Stock Analysis Report
