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.

Rewards

Earnings are forecast to grow 13.29% per year

Earnings grew by 17% over the past year

Pays a high and reliable dividend of 1.81%

Risk Analysis

No risks detected for AJG from our risk checks.


Snowflake Analysis

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

Stable Share Price: AJG has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.6%

AJG

1.2%

US Insurance

1.7%

US Market


1 Year Return

29.1%

AJG

18.6%

US Insurance

23.2%

US Market

Return vs Industry: AJG exceeded the US Insurance industry which returned 20.4% over the past year.

Return vs Market: AJG exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

AJGIndustryMarket
7 Day0.6%1.2%1.7%
30 Day1.7%1.1%4.2%
90 Day7.3%4.0%11.9%
1 Year31.7%29.1%21.7%18.6%25.8%23.2%
3 Year94.8%81.8%36.2%25.7%52.8%42.9%
5 Year141.4%111.1%73.2%52.4%75.2%55.8%

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?

25.85x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: AJG ($95.09) is trading above our estimate of fair value ($86.03)

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 (25.6x) compared to the Insurance industry average (16.4x).

PE vs Market: AJG is poor value based on its PE Ratio (25.6x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: AJG is poor value based on its PEG Ratio (1.9x)


Price to Book Ratio

PB vs Industry: AJG is overvalued based on its PB Ratio (3.7x) compared to the US Insurance industry average (1.2x).


Next Steps

Future Growth

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

13.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: AJG's forecast earnings growth (13.3% per year) is above the savings rate (1.7%).

Earnings vs Market: AJG's earnings (13.3% per year) are forecast to grow slower than the US market (14.3% per year).

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

Revenue vs Market: AJG's revenue (6.9% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: AJG's revenue (6.9% 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 (13.4%).


Next Steps

Past Performance

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

18.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: AJG has high quality earnings.

Growing Profit Margin: AJG's current net profit margins (10%) are higher than last year (8.9%).


Past Earnings Growth Analysis

Earnings Trend: AJG's earnings have grown by 18.2% per year over the past 5 years.

Accelerating Growth: AJG's earnings growth over the past year (17%) is below its 5-year average (18.2% per year).

Earnings vs Industry: AJG earnings growth over the past year (17%) exceeded the Insurance industry -11.3%.


Return on Equity

High ROE: AJG's Return on Equity (15%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Arthur J. Gallagher's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: AJG has a low level of unsold assets or inventory.

Debt Coverage by Assets: AJG's debt is covered by short term assets (assets are 2x debt).


Financial Institutions Analysis

Asset Level: AJG's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if AJG has a sufficient allowance for bad loans.

Low Risk Liabilities: AJG reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if AJG has an acceptable proportion of non-loan assets held.

Low Risk Deposits: AJG has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if AJG has an appropriate level of bad loans.


Next Steps

Dividend

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

1.79%

Current Dividend Yield


Dividend Yield vs Market

company1.8%marketbottom25%1.4%markettop25%3.6%industryaverage2.3%forecastin3Years1.9%

Current dividend yield vs market & industry

Notable Dividend: AJG's dividend (1.81%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: AJG's dividend (1.81%) is low compared to the top 25% of dividend payers in the US market (3.66%).


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 (45.7%), 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 (40.7% payout ratio).


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?

13.0yrs

Average management tenure


CEO

Pat Gallagher (67yo)

25yrs

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

Compensation vs Market: Pat's total compensation ($USD0.00) is below average for companies of similar size in the US market ($USD10.76M).

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


Management Age and Tenure

13.0yrs

Average Tenure

57yo

Average Age

Experienced Management: AJG's management team is seasoned and experienced (13 years average tenure).


Board Age and Tenure

10.7yrs

Average Tenure

68yo

Average Age

Experienced Board: AJG's board of directors are seasoned and experienced ( 10.7 years average tenure).


Insider Trading

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


Recent Insider Transactions

SellUS$132,61722 Nov 19
Frank English
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares1,450
Max PriceUS$91.46
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

Ownership Breakdown

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


Management Team

  • Pat Gallagher (67yo)

    Chairman

    • Tenure: 25yrs
  • Doug Howell (57yo)

    Corporate VP & Chief Financial Officer

    • Tenure: 16.8yrs
    • Compensation: US$4.19m
  • Sean Connelly (52yo)

    Global Chief Information Officer and Corporate Vice President

    • Tenure: 4.7yrs
  • Tom Gallagher (60yo)

    Corporate VP and President of Global Property & Casualty Brokerage

    • Tenure: 3yrs
    • Compensation: US$4.51m
  • David Long (67yo)

    Vice President

    • Richard Cary (56yo)

      Chief Accounting Officer

      • Walt Bay (56yo)

        Corporate VP

        • Tenure: 13yrs
        • Compensation: US$3.11m
      • Ray Iardella

        Vice President of Investor Relations

        • Tenure: 4yrs
      • Scott Hudson (57yo)

        Corporate VP

        • Compensation: US$3.18m
      • Patrick Gallagher

        Chairman of Canada

        • Compensation: US$8.06m

      Board Members

      • Pat Gallagher (67yo)

        Chairman

        • Tenure: 25yrs
      • Sherry Barrat (69yo)

        Independent Director

        • Tenure: 6.5yrs
        • Compensation: US$260.41k
      • David Coldman (71yo)

        Independent Director

        • Tenure: 5.2yrs
        • Compensation: US$240.41k
      • David Johnson (63yo)

        Lead Director

        • Tenure: 4yrs
        • Compensation: US$270.41k
      • Kay McCurdy (68yo)

        Independent Director

        • Tenure: 14.3yrs
        • Compensation: US$255.41k
      • Richard Cary (56yo)

        Chief Accounting Officer

        • Bill Bax (75yo)

          Independent Director

          • Tenure: 13.3yrs
          • Compensation: US$265.41k
        • Norman Rosenthal (68yo)

          Independent Director

          • Tenure: 12yrs
          • Compensation: US$240.41k
        • Frank English (73yo)

          Independent Director

          • Tenure: 10.7yrs
          • Compensation: US$240.41k
        • David Jack

          Chairman of Technical Advisory Board

          • Tenure: 4.3yrs

        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$17.916b
        • Shares outstanding: 186.52m
        • 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 internationally. Its Brokerage segment consists of retail and wholesale insurance brokerage operations. It offers brokerage and consulting services to businesses and organizations, including commercial, not-for-profit, and public entities, as well as individuals in the areas of insurance placement, risk of loss management, and management of employer sponsored benefit programs. This segment also assist retail brokers and other non-affiliated brokers in the placement of specialized and hard-to-place insurance; acts as a brokerage wholesaler, and managing general agent or managing general underwriter distributing specialized insurance coverage's for underwriting enterprises; and performs activities, including marketing, underwriting, issuing policies, collecting premiums, appointing and supervising other agents, paying claims, and negotiating reinsurance. The company’s Risk Management segment provides contract claim settlement and administration services for enterprises and public entities; and claims management, loss control consulting, and insurance property appraisal services. The company offers its services through a network of correspondent insurance brokers and consultants. Arthur J. Gallagher & Co. was founded in 1927 and is headquartered in Rolling Meadows, Illinois. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/17 01:31
        End of Day Share Price2020/01/16 00:00
        Earnings2019/09/30
        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.