NYSE:AJG

Stock Analysis Report

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Executive Summary

Arthur J. Gallagher & Co., together with its subsidiaries, provides insurance brokerage, consulting, and third party claims settlement and administration services in the United States, Australia, Bermuda, Canada, the Caribbean, New Zealand, and the United Kingdom. More Details


Snowflake Analysis

Established dividend payer with adequate balance sheet.


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

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

Volatility Over Time: AJG's weekly volatility (3%) has been stable over the past year.


Market Performance


7 Day Return

0.3%

AJG

-0.6%

US Insurance

0.7%

US Market


1 Year Return

25.8%

AJG

-3.8%

US Insurance

22.2%

US Market

Return vs Industry: AJG exceeded the US Insurance industry which returned -3.4% over the past year.

Return vs Market: AJG exceeded the US Market which returned 22.7% over the past year.


Shareholder returns

AJGIndustryMarket
7 Day0.3%-0.6%0.7%
30 Day9.3%12.2%11.8%
90 Day11.3%10.3%8.6%
1 Year28.0%25.8%-1.1%-3.8%25.0%22.2%
3 Year87.0%76.9%10.7%2.6%49.4%39.5%
5 Year202.3%169.5%51.8%32.9%100.2%78.1%

Long-Term 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 compared to its fair value and its price relative to the market?

28.49x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: AJG ($116.43) is trading above our estimate of fair value ($93.04)

Significantly Below Fair Value: AJG is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: AJG is poor value based on its PE Ratio (28.5x) compared to the US Insurance industry average (14.2x).

PE vs Market: AJG is poor value based on its PE Ratio (28.5x) compared to the US market (19.4x).


Price to Earnings Growth Ratio

PEG Ratio: AJG is poor value based on its PEG Ratio (2.5x)


Price to Book Ratio

PB vs Industry: AJG is overvalued based on its PB Ratio (3.9x) compared to the US Insurance industry average (0.9x).


Next Steps

Future Growth

How is Arthur J. Gallagher forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

11.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: AJG's forecast earnings growth (11.4% per year) is above the savings rate (2.2%).

Earnings vs Market: AJG's earnings (11.4% per year) are forecast to grow slower than the US market (21.8% per year).

High Growth Earnings: AJG's earnings are forecast to grow, but not significantly.

Revenue vs Market: AJG's revenue (7.2% per year) is forecast to grow slower than the US market (10.2% per year).

High Growth Revenue: AJG's revenue (7.2% 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 (12.4%).


Next Steps

Past Performance

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

15.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: AJG has high quality earnings.

Growing Profit Margin: AJG's current net profit margins (11.4%) are higher than last year (10%).


Past Earnings Growth Analysis

Earnings Trend: AJG's earnings have grown by 15.3% per year over the past 5 years.

Accelerating Growth: AJG's earnings growth over the past year (12.8%) is below its 5-year average (15.3% per year).

Earnings vs Industry: AJG earnings growth over the past year (12.8%) exceeded the Insurance industry 6%.


Return on Equity

High ROE: AJG's Return on Equity (13.9%) is considered low.


Next Steps

Financial Health

How is Arthur J. Gallagher's financial position?


Financial Position Analysis

Short Term Liabilities: AJG's short term assets ($11.2B) exceed its short term liabilities ($10.1B).

Long Term Liabilities: AJG's short term assets ($11.2B) exceed its long term liabilities ($5.9B).


Debt to Equity History and Analysis

Debt Level: AJG's debt to equity ratio (78.6%) is considered high.

Reducing Debt: AJG's debt to equity ratio has increased from 64.6% to 78.6% over the past 5 years.

Debt Coverage: AJG's debt is well covered by operating cash flow (38%).

Interest Coverage: AJG's interest payments on its debt are well covered by EBIT (8.4x coverage).


Balance Sheet


Next Steps

Dividend

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

1.55%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: AJG's dividend (1.55%) is higher than the bottom 25% of dividend payers in the US market (1.48%).

High Dividend: AJG's dividend (1.55%) is low compared to the top 25% of dividend payers in the US market (4.14%).


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.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (43.6%), AJG's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: AJG's dividends in 3 years are forecast to be well covered by earnings (39.5% payout ratio).


Next Steps

Management

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

12.3yrs

Average management tenure


CEO

Pat Gallagher (68 yo)

25.92yrs

Tenure

US$8,960,616

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 ($USD8.96M) is about average for companies of similar size in the US market ($USD10.98M).

Compensation vs Earnings: Pat's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
J. Gallagher
Chairman25.92yrsUS$8.96m0.46%
$ 102.0m
Douglas Howell
Corporate VP & Chief Financial Officer17.67yrsUS$4.42m0.029%
$ 6.4m
Walter Bay
Corporate VP13.92yrsUS$3.29m0.011%
$ 2.4m
Thomas Gallagher
Corporate VP and President of Global Property & Casualty Brokerage3.92yrsUS$4.32m0.27%
$ 60.3m
Scott Hudson
Corporate VP & President of Risk Management Operation10.92yrsUS$3.21m0.018%
$ 4.1m
David Long
Vice Presidentno datano datano data
Richard Cary
Chief Accounting Officer & Controller19.92yrsno data0.018%
$ 4.0m
Sean Connelly
Global Chief Information Officer and Corporate Vice President5.58yrsno datano data
Raymond Iardella
Vice President of Investor Relations4.92yrsno datano data
Linda Collins
Vice President of Corporate Communicationsno datano datano data
Christopher Mead
Corporate VP & Chief Marketing Officer3.58yrsno datano data
Susan Pietrucha
Corporate VP & Chief Human Resource Officer13.58yrsno data0.00086%
$ 192.6k

12.3yrs

Average Tenure

57.5yo

Average Age

Experienced Management: AJG's management team is seasoned and experienced (12.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
J. Gallagher
Chairman25.92yrsUS$8.96m0.46%
$ 102.0m
Sherry Barrat
Independent Director7.42yrsUS$276.34k0.0099%
$ 2.2m
David Coldman
Independent Director6.08yrsUS$256.34k0.0048%
$ 1.1m
David Johnson
Independent Lead Director4.92yrsUS$286.34k0.024%
$ 5.4m
Kay McCurdy
Independent Director15.17yrsUS$271.34k0.016%
$ 3.5m
Ralph Nicoletti
Independent Director4.92yrsUS$256.34k0.0053%
$ 1.2m
William Bax
Independent Director14.17yrsUS$281.34k0.022%
$ 4.9m
Norman Rosenthal
Independent Director12.92yrsUS$256.34k0.018%
$ 4.0m
Frank English
Independent Director11.58yrsUS$256.34k0.0029%
$ 640.4k
David Jack
Chairman of Technical Advisory Board5.17yrsno datano data
Christopher Miskel
Independent Director0.75yrno datano data

7.4yrs

Average Tenure

69yo

Average Age

Experienced Board: AJG's board of directors are considered experienced (7.4 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: AJG insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3.1%.


Top Shareholders

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$22.392b
  • Shares outstanding: 192.32m
  • 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
A1JG34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 2 REPR 1 COMBRBRLJan 2020

Biography

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


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/12/02 23:17
End of Day Share Price2020/12/02 00:00
Earnings2020/09/30
Annual Earnings2019/12/31


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.