Arthur J. Gallagher (NYSE:AJG) - Share price, News & Analysis

AJG fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	4/6
Past Performance	2/6
Financial Health	5/6
Dividends	4/6

AJG Stock Overview

Rewards

Trading at 23.4% below our estimate of its fair value

Earnings are forecast to grow 25.41% per year

Earnings grew by 12.7% over the past year

Risk Analysis

Has a high level of debt

Large one-off items impacting financial results

Arthur J. Gallagher Competitors

Marsh & McLennan Companies

NYSE:MMC

US$77.2b

Aon

NYSE:AON

US$56.9b

Willis Towers Watson

NasdaqGS:WTW

US$22.7b

Brown & Brown

NYSE:BRO

US$15.8b

Price History & Performance

Summary of all time highs, changes and price drops for Arthur J. Gallagher
Historical stock prices
Current Share Price	US$157.49
52 Week High	US$187.02
52 Week Low	US$135.50
Beta	0.70
1 Month Change	-11.96%
3 Month Change	1.99%
1 Year Change	8.50%
3 Year Change	87.40%
5 Year Change	177.61%
Change since IPO	2,445.29%

Recent News & Updates

May 25

Arthur J. Gallagher Reassures Safety And Stability

Arthur J. Gallagher & Co. still shows robust financial performance. Its fundamentals remain sound without any hint of overspending on acquisition. The recent trend of the stock price appears to be geared downwards. The company has adequate earnings to sustain dividend payments.

Shareholder Returns

	AJG	US Insurance	US Market
7D	0.5%	-2.2%	-4.0%
1Y	8.5%	2.5%	-13.2%

Return vs Industry: AJG exceeded the US Insurance industry which returned 2.5% over the past year.

Return vs Market: AJG exceeded the US Market which returned -13.2% over the past year.

Price Volatility

Is AJG's price volatile compared to industry and market?
AJG volatility
AJG Average Weekly Movement	4.4%
Insurance Industry Average Movement	5.0%
Market Average Movement	7.8%
10% most volatile stocks in US Market	16.8%
10% least volatile stocks in US Market	2.9%

Stable Share Price: AJG is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: AJG's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1927	2,200	Pat Gallagher	https://www.ajg.com

Arthur J. Gallagher & Co., together with its subsidiaries, provides insurance brokerage, consulting, third-party claims settlement, and administration services in the United States, Australia, Bermuda, Canada, the Caribbean, New Zealand, India, and the United Kingdom. It operates through Brokerage and Risk Management segments. The Brokerage segment consists of retail and wholesale insurance brokerage operations; assists retail brokers and other non-affiliated brokers in the placement of specialized and hard-to-place insurance; acts as a brokerage wholesaler, managing general agent, and managing general underwriter for distributing specialized insurance coverage's to underwriting enterprises.

Arthur J. Gallagher Fundamentals Summary

How do Arthur J. Gallagher's earnings and revenue compare to its market cap?
AJG fundamental statistics
Market Cap	US$33.14b
Earnings (TTM)	US$963.40m
Revenue (TTM)	US$8.25b

34.3x

P/E Ratio

4.0x

P/S Ratio

Is AJG overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
AJG income statement (TTM)
Revenue	US$8.25b
Cost of Revenue	US$5.02b
Gross Profit	US$3.23b
Other Expenses	US$2.26b
Earnings	US$963.40m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	4.59
Gross Margin	39.12%
Net Profit Margin	11.68%
Debt/Equity Ratio	68.4%

How did AJG perform over the long term?

See historical performance and comparison

Dividends

1.3%

Current Dividend Yield

42%

Payout Ratio

Does AJG pay a reliable dividends?

See AJG dividend history and benchmarks

When do you need to buy AJG by to receive an upcoming dividend?
Arthur J. Gallagher dividend dates
Ex Dividend Date	Jun 02 2022
Dividend Pay Date	Jun 17 2022
Days until Ex dividend	7 days
Days until Dividend pay date	22 days

Does AJG pay a reliable dividends?

See AJG dividend history and benchmarks

Valuation

Is Arthur J. Gallagher undervalued compared to its fair value and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Below Fair Value
Significantly Below Fair Value
PE vs Industry
PE vs Market
PEG Ratio
PB vs Industry

23.4%

Undervalued compared to fair value

Share Price vs. Fair Value

Below Fair Value: AJG ($157.49) is trading below our estimate of fair value ($205.53)

Significantly Below Fair Value: AJG is trading below fair value by more than 20%.

Price To Earnings Ratio

PE vs Industry: AJG is poor value based on its Price-To-Earnings Ratio (34.3x) compared to the US Insurance industry average (11.1x).

PE vs Market: AJG is poor value based on its Price-To-Earnings Ratio (34.3x) compared to the US market (14.9x).

Price to Earnings Growth Ratio

PEG Ratio: AJG is poor value based on its PEG Ratio (1.4x)

Price to Book Ratio

PB vs Industry: AJG is overvalued based on its Price-To-Book Ratio (3.7x) compared to the US Insurance industry average (1x).

Future Growth

How is Arthur J. Gallagher forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

25.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: AJG's forecast earnings growth (25.4% per year) is above the savings rate (1.9%).

Earnings vs Market: AJG's earnings (25.4% per year) are forecast to grow faster than the US market (12.1% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: AJG's revenue (10% per year) is forecast to grow faster than the US market (7.7% per year).

High Growth Revenue: AJG's revenue (10% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: AJG's Return on Equity is forecast to be low in 3 years time (17.4%).

Past Performance

How has Arthur J. Gallagher performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

13.1%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: AJG has a large one-off loss of $327.7M impacting its March 31 2022 financial results.

Growing Profit Margin: AJG's current net profit margins (11.7%) are lower than last year (12.1%).

Past Earnings Growth Analysis

Earnings Trend: AJG's earnings have grown by 13.1% per year over the past 5 years.

Accelerating Growth: AJG's earnings growth over the past year (12.7%) is below its 5-year average (13.1% per year).

Earnings vs Industry: AJG earnings growth over the past year (12.7%) exceeded the Insurance industry -2.6%.

Return on Equity

High ROE: AJG's Return on Equity (11.1%) is considered low.

Financial Health

How is Arthur J. Gallagher's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: AJG's short term assets ($27.5B) exceed its short term liabilities ($26.1B).

Long Term Liabilities: AJG's short term assets ($27.5B) exceed its long term liabilities ($8.0B).

Debt to Equity History and Analysis

Debt Level: AJG's net debt to equity ratio (62.5%) is considered high.

Reducing Debt: AJG's debt to equity ratio has reduced from 79% to 68.4% over the past 5 years.

Debt Coverage: AJG's debt is well covered by operating cash flow (31%).

Interest Coverage: AJG's interest payments on its debt are well covered by EBIT (10.1x coverage).

Balance Sheet

Dividend

What is Arthur J. Gallagher current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

1.30%

Current Dividend Yield

Upcoming Dividend Payment

Dividend Yield vs Market

Notable Dividend: AJG's dividend (1.3%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.57%).

High Dividend: AJG's dividend (1.3%) is low compared to the top 25% of dividend payers in the US market (4.06%).

Stability and Growth of Payments

Stable Dividend: AJG's dividends per share have been stable in the past 10 years.

Growing Dividend: AJG's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (41.8%), AJG's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (24.1%), AJG's dividend payments are well covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

13.7yrs

Average management tenure

CEO

Pat Gallagher (69 yo)

32.33yrs

Tenure

US$13,882,255

Compensation

Mr. J. Patrick Gallagher, Jr. also known as Pat, serves as the Chief Executive Officer and President of Gallagher Koster (alternate name, Koster Insurance Agency, Inc.) and VEBA Service Group, LLC. Mr. Gal...

CEO Compensation Analysis

Compensation vs Market: Pat's total compensation ($USD13.88M) is about average for companies of similar size in the US market ($USD13.26M).

Compensation vs Earnings: Pat's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: AJG's management team is seasoned and experienced (13.7 years average tenure).

Board Members

Experienced Board: AJG's board of directors are considered experienced (8.8 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/05/25 00:00
End of Day Share Price	2022/05/25 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31