NYSE:AJG

Stock Analysis Report

Executive Summary

Arthur J. Gallagher & Co., together with its subsidiaries, provides insurance brokerage, consulting, and third party claims settlement and administration services to entities in the United States and internationally.

Snowflake

Fundamentals

Established dividend payer with proven track record.


Similar Companies

Share Price & News

How has Arthur J. Gallagher's share price performed over time and what events caused price changes?


Latest Share Price and Events


Market Performance


7 Day Return

-3.9%

NYSE:AJG

0.6%

US Insurance

1.2%

US Market


1 Year Return

16.1%

NYSE:AJG

9.3%

US Insurance

1.7%

US Market

AJG outperformed the Insurance industry which returned 9.3% over the past year.

AJG outperformed the Market in United States of America which returned 1.7% over the past year.


Share holder returns

AJGIndustryMarket
7 Day-3.9%0.6%1.2%
30 Day-1.7%3.1%4.9%
90 Day-0.8%1.3%3.7%
1 Year18.5%16.1%11.9%9.3%3.9%1.7%
3 Year88.3%75.2%48.0%36.7%47.2%37.7%
5 Year120.8%92.4%68.3%48.2%60.0%42.4%

Price Volatility Vs. Market

How volatile is Arthur J. Gallagher's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Arthur J. Gallagher undervalued based on future cash flows and its price relative to the stock market?

23.26x

Price to Earnings (PE) ratio


Intrinsic Value Based on Future Cash Flows

Arthur J. Gallagher's share price is above the future cash flow value, it's not available at a moderate discount (< 20%).

Arthur J. Gallagher's share price is above the future cash flow value, it's not available at a substantial discount (< 40%).


Price Based on Earnings

Arthur J. Gallagher is overvalued based on earnings compared to the US Insurance industry average.

Arthur J. Gallagher is overvalued based on earnings compared to the United States of America market.


Price Based on Expected Growth

Arthur J. Gallagher is poor value based on expected growth next year.


Price Based on Value of Assets

Arthur J. Gallagher is overvalued based on assets compared to the US Insurance industry average.


Next Steps

Future Growth

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

15.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Estimates


Future Annual Growth Analysis

Arthur J. Gallagher's revenue is expected to grow by 5.6% yearly, however this is not considered high growth (20% yearly).

Arthur J. Gallagher's earnings are expected to grow by 15.5% yearly, however this is not considered high growth (20% yearly).

Arthur J. Gallagher's revenue growth is positive but not above the United States of America market average.

Arthur J. Gallagher's earnings growth is expected to exceed the United States of America market average.

Arthur J. Gallagher's earnings growth is expected to exceed the low risk savings rate of 2.7%.


Earnings per Share Growth Estimates


Future Return on Equity

Arthur J. Gallagher is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).


Next Steps

Past Performance

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

18.3%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Arthur J. Gallagher's year on year earnings growth rate has been positive over the past 5 years.

Arthur J. Gallagher's 1-year earnings growth exceeds its 5-year average (20.7% vs 18.3%)

Arthur J. Gallagher's earnings growth has exceeded the US Insurance industry average in the past year (20.7% vs 3.1%).


Return on Equity

Arthur J. Gallagher has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).


Return on Assets

Arthur J. Gallagher used its assets more efficiently than the US Insurance industry average last year based on Return on Assets.


Return on Capital Employed

Arthur J. Gallagher's use of capital deteriorated last year versus 3 years ago (Return on Capital Employed).


Next Steps

Financial Health

How is Arthur J. Gallagher's financial position?


Financial Position Analysis

Arthur J. Gallagher is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.

Arthur J. Gallagher's cash and other short term assets cover its long term commitments.


Debt to Equity History and Analysis

Arthur J. Gallagher's level of debt (89.5%) compared to net worth is high (greater than 40%).

The level of debt compared to net worth has increased over the past 5 years (77.4% vs 89.5% today).

Debt is not well covered by operating cash flow (19.7%, less than 20% of total debt).

Interest payments on debt are well covered by earnings (EBIT is 8.7x coverage).


Balance Sheet

Low level of unsold assets.

Debt is covered by short term assets, assets are 2.2x debt.


Next Steps

Dividend

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

2.04%

Expected Dividend Yield


Dividend Yield and Payments Analysis

Arthur J. Gallagher's pays a higher dividend yield than the bottom 25% of dividend payers in United States of America (1.45%).

Arthur J. Gallagher's dividend is below the markets top 25% of dividend payers in United States of America (3.67%).

Dividends per share have been stable in the past 10 years.

Dividends per share have increased over the past 10 years.


Current Payout to Shareholders

Dividends paid are well covered by earnings (2.2x coverage).


Future Payout to Shareholders

Dividends after 3 years are expected to be well covered by earnings (2.4x coverage).


Next Steps

Management

What is the CEO of Arthur J. Gallagher's salary, the management and board of directors tenure and is there insider trading?

11.2yrs

Average management tenure


CEO

Pat Gallagher (67yo)

24.7yrs

Tenure

0

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

Insufficient data for Pat to establish whether their remuneration is reasonable compared to companies of similar size in United States of America.

Pat's compensation has increased by more than 20% in the past year whilst earnings grew less than 20%.


Management Age and Tenure

11.2yrs

Average Tenure

57yo

Average Age

The average tenure for the Arthur J. Gallagher management team is over 5 years, this suggests they are a seasoned and experienced team.


Board Age and Tenure

10.3yrs

Average Tenure

68yo

Average Age

The average tenure for the Arthur J. Gallagher board of directors is over 10 years, this suggests they are a seasoned and experienced board.


Insider Trading

Arthur J. Gallagher individual insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$204,39021 Aug 19
Kay McCurdy
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,250
Max PriceUS$90.84
SellUS$207,00031 Jul 19
Kay McCurdy
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,250
Max PriceUS$92.00
SellUS$102,13205 Jun 19
William Bax
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares1,200
Max PriceUS$85.11
SellUS$167,73703 Jun 19
Susan Pietrucha
EntityIndividual
Shares1,990
Max PriceUS$84.29
SellUS$66,46407 May 19
Frank English
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares800
Max PriceUS$83.08
SellUS$396,82819 Feb 19
David Johnson
EntityIndividual
Role
Lead Director
Lead Director
Shares5,000
Max PriceUS$79.74
SellUS$85,42607 Feb 19
Frank English
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares1,100
Max PriceUS$77.66
BuyUS$292,80021 Dec 18
Thomas Gallagher
EntityIndividual
Role
Senior Key Executive
Corporate VP and President of Global Property & Casualty Brokerage
Shares4,000
Max PriceUS$73.20

Ownership Breakdown


Management Team

  • Pat Gallagher (67yo)

    Chairman

    • Tenure: 24.7yrs
  • Doug Howell (57yo)

    Corporate VP & Chief Financial Officer

    • Tenure: 16.4yrs
    • Compensation: US$4.19m
  • Sean Connelly (52yo)

    Global Chief Information Officer and Corporate Vice President

    • Tenure: 4.3yrs
  • Tom Gallagher (60yo)

    Corporate VP and President of Global Property & Casualty Brokerage

    • Tenure: 2.7yrs
    • Compensation: US$4.51m
  • David Long (67yo)

    Vice President

    • Tenure: 0yrs
  • Richard Cary (56yo)

    Chief Accounting Officer

    • Tenure: 0yrs
  • Walt Bay (56yo)

    Corporate VP

    • Tenure: 12.7yrs
    • Compensation: US$3.11m
  • Ray Iardella

    Vice President of Investor Relations

    • Tenure: 3.7yrs
  • Scott Hudson (57yo)

    Corporate VP

    • Tenure: 9.7yrs
    • Compensation: US$3.18m
  • Patrick Gallagher

    Executive Vice President of Midwest Region

    • Tenure: 0yrs
    • Compensation: US$8.06m

Board Members

  • Pat Gallagher (67yo)

    Chairman

    • Tenure: 24.7yrs
  • Sherry Barrat (69yo)

    Independent Director

    • Tenure: 6.2yrs
    • Compensation: US$260.41k
  • David Coldman (71yo)

    Independent Director

    • Tenure: 4.8yrs
    • Compensation: US$240.41k
  • David Johnson (63yo)

    Lead Director

    • Tenure: 3.7yrs
    • Compensation: US$270.41k
  • Kay McCurdy (68yo)

    Independent Director

    • Tenure: 13.9yrs
    • Compensation: US$255.41k
  • Richard Cary (56yo)

    Chief Accounting Officer

    • Tenure: 0yrs
  • Bill Bax (75yo)

    Independent Director

    • Tenure: 12.9yrs
    • Compensation: US$265.41k
  • Norman Rosenthal (68yo)

    Independent Director

    • Tenure: 11.7yrs
    • Compensation: US$240.41k
  • Frank English (73yo)

    Independent Director

    • Tenure: 10.3yrs
    • Compensation: US$240.41k
  • David Jack

    Chairman of Technical Advisory Board

    • Tenure: 3.9yrs

Company Information

Arthur J. Gallagher & Co.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Arthur J. Gallagher & Co.
  • Ticker: AJG
  • Exchange: NYSE
  • Founded: 1927
  • Industry: Insurance Brokers
  • Sector: Insurance
  • Market Cap: US$16.184b
  • Shares outstanding: 186.07m
  • Website: https://www.ajg.com

Number of Employees


Location

  • Arthur J. Gallagher & Co.
  • 2850 Golf Road
  • Rolling Meadows
  • Illinois
  • 60008
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
AJGNYSE (New York Stock Exchange)YesCommon StockUSUSDJun 1984
GAHDB (Deutsche Boerse AG)YesCommon StockDEEURJun 1984
0ITLLSE (London Stock Exchange)YesCommon StockGBUSDJun 1984
AJG *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNJun 1984

Biography

Arthur J. Gallagher & Co., together with its subsidiaries, provides insurance brokerage, consulting, and third party claims settlement and administration services to entities in the United States and inter ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/09/14 23:35
End of Day Share Price2019/09/13 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.