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Arthur J Gallagher & Co (AJG)AJG
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Upturn Advisory Summary
10/29/2024: AJG (3-star) is currently NOT-A-BUY. Pass it for now.
Analysis of Past Performance
Type: Stock | Upturn Star Rating | Today’s Advisory: PASS |
Historic Profit: 28.29% | Upturn Advisory Performance 5 | Avg. Invested days: 50 |
Profits based on simulation | Stock Returns Performance 3 | Last Close 10/29/2024 |
Type: Stock | Today’s Advisory: PASS |
Historic Profit: 28.29% | Avg. Invested days: 50 |
Upturn Star Rating | Stock Returns Performance 3 |
Profits based on simulation Last Close 10/29/2024 | Upturn Advisory Performance 5 |
Key Highlights
Company Size Large-Cap Stock | Market Capitalization 63.98B USD |
Price to earnings Ratio 54.68 | 1Y Target Price 293.85 |
Dividends yield (FY) 0.85% | Basic EPS (TTM) 5.23 |
Volume (30-day avg) 1035954 | Beta 0.72 |
52 Weeks Range 217.13 - 301.04 | Updated Date 10/28/2024 |
Company Size Large-Cap Stock | Market Capitalization 63.98B USD | Price to earnings Ratio 54.68 | 1Y Target Price 293.85 |
Dividends yield (FY) 0.85% | Basic EPS (TTM) 5.23 | Volume (30-day avg) 1035954 | Beta 0.72 |
52 Weeks Range 217.13 - 301.04 | Updated Date 10/28/2024 |
Earnings Date
Report Date 2024-10-24 | When AfterMarket |
Estimate 2.27 | Actual 2.26 |
Report Date 2024-10-24 | When AfterMarket | Estimate 2.27 | Actual 2.26 |
Profitability
Profit Margin 10.99% | Operating Margin (TTM) 18.14% |
Management Effectiveness
Return on Assets (TTM) 2.91% | Return on Equity (TTM) 10.32% |
Revenue by Products
Revenue by Products - Current and Previous Year
Revenue by Geography
Revenue by Geography - Current and Previous Year
Valuation
Trailing PE 54.68 | Forward PE 24.94 |
Enterprise Value 68652234620 | Price to Sales(TTM) 6 |
Enterprise Value to Revenue 6.09 | Enterprise Value to EBITDA 26.04 |
Shares Outstanding 219446000 | Shares Floating 216617341 |
Percent Insiders 1.12 | Percent Institutions 88.85 |
Trailing PE 54.68 | Forward PE 24.94 | Enterprise Value 68652234620 | Price to Sales(TTM) 6 |
Enterprise Value to Revenue 6.09 | Enterprise Value to EBITDA 26.04 | Shares Outstanding 219446000 | Shares Floating 216617341 |
Percent Insiders 1.12 | Percent Institutions 88.85 |
Analyst Ratings
Rating 3.65 | Target Price 248.13 | Buy 4 |
Strong Buy 6 | Hold 7 | Sell 3 |
Strong Sell - |
Rating 3.65 | Target Price 248.13 | Buy 4 | Strong Buy 6 |
Hold 7 | Sell 3 | Strong Sell - |
AI Summarization
Arthur J. Gallagher & Co. (AJG): A Comprehensive Overview (as of November 10, 2023)
Company Profile
History: Founded in 1927, Arthur J. Gallagher & Co. has grown from a small Chicago brokerage to a global leader in insurance, risk management, and consulting services. Today, they boast a presence in over 130 countries with more than 32,000 employees.
Core Business: AJG operates under two main segments:
- Retail: Offers property and casualty insurance, employee benefits consulting, and risk management solutions to mid-market and large clients.
- Wholesale: Provides reinsurance intermediary services, specialty insurance brokerage, and program management solutions to insurance brokers and agencies.
Leadership: The company is led by J. Patrick Gallagher Jr. (Chairman, President & CEO) and Douglas Howell (Executive Vice President & CFO). The Gallagher family maintains significant control over the company.
Top Products and Market Share
Top Products: AJG offers a diverse range of products, including:
- Commercial property and casualty insurance: AJG is a leading player in this market, holding a 4% market share in the US.
- Employee benefits consulting: AJG is one of the largest employee benefits consultants in the world, with a 5% market share in the US.
- Risk management solutions: AJG provides customized risk management solutions to a wide range of clients.
Market Share: AJG's global market share across all its services is estimated to be around 2%. In the US, they hold a leading position in various insurance segments:
- Commercial property: 4% market share
- Commercial casualty: 3% market share
- Employee benefits: 5% market share
Products and Competition: AJG's products face competition from several established players such as Marsh McLennan, Aon, and Willis Towers Watson. However, AJG's diversified business model and strong global presence give it a competitive edge.
Total Addressable Market
The global insurance broking market is estimated to be worth around $261 billion, making it a vast market for AJG to operate in. As the global economy continues to grow, the need for insurance and risk management services is expected to increase significantly, creating further opportunities for AJG.
Financial Performance
Recent Results: AJG has demonstrated consistent financial performance in recent years.
- Revenue: In 2022, AJG reported $3.95 billion in revenue, representing a 7.4% increase over the previous year.
- Net Income: 2022 net income was $530.3 million, reflecting a 0.5% increase year-over-year.
- Profit Margins: Profit margin remained stable at approximately 13.4% in 2022.
- Earnings per Share (EPS): AJG's EPS stood at $8.47 in 2022, demonstrating a 4.9% increase from the previous year.
Financial Health: AJG maintains a healthy cash flow and a strong balance sheet. Their debt-to-equity ratio of 0.28 suggests a low debt burden with ample room for further investments.
Dividends and Shareholder Returns
Dividend History: AJG has a consistent record of dividend payouts. Their current annual dividend yield stands at 1.83%, with a payout ratio of 32.9%. The company has increased dividends steadily over the past five years.
Shareholder Returns: AJG has delivered strong shareholder returns over various timeframes:
- 1 year: 22.9%
- 5 years: 79.6%
- 10 years: 234.5%
Growth Trajectory
Historical Growth: AJG has consistently achieved organic growth over the past decade. Their revenue grew at a compound annual growth rate (CAGR) of 9.5% between 2013 and 2022. Additionally, acquisitions played a significant role in boosting their size and capabilities.
Future Growth: Based on industry trends and company guidance, AJG's future growth is expected to be driven by:
- Organic growth: Increasing demand for insurance broking and risk management services in a growing global economy.
- Strategic acquisitions: AJG actively pursues strategic acquisitions to expand its geographic reach, service offerings, and client base.
- Technology and innovation: AJG is investing heavily in technology and innovation to improve client services and remain competitive.
Market Dynamics
Industry Trends: The insurance broking industry is experiencing several key trends:
- Digitalization: Adoption of technological solutions for faster and more efficient services.
- Consolidation: Mergers and acquisitions among industry players to gain scale and market share.
- Focus on data analytics: Utilizing data to understand client needs and provide customized solutions.
Company positioning: AJG is well-positioned in the changing market:
- Strong focus on technology and innovation ensures they keep pace with digital transformation.
- Global presence helps them capitalize on international market growth potential.
- Diversified business model provides them resilience against fluctuations in certain segments.
Competitors
Key Competitors:
- Marsh McLennan (MMC): Market leader with a global presence and diversified business model.
- Aon (AON): Strong competitor with focus on large corporate clients.
- Willis Towers Watson (WLTW): Global player with expertise in risk management and human capital solutions.
Market Share: While AJG holds the leading market share in specific segments, these competitors remain major players in the overall market. Understanding their strategies and strengths is crucial for AJG's future success.
Potential Challenges and Opportunities
Challenges:
- Supply chain disruptions: Global events such as wars and pandemics can disrupt service delivery and global operations.
- Technological changes: Staying at the forefront of technological advancements is crucial for maintaining a competitive edge.
- Increasing competition: The industry is becoming increasingly competitive, requiring constant innovation and differentiation.
Opportunities:
- Expanding into new markets: Growing economies in Asia and other emerging markets present vast potential for business expansion.
- Product innovations: Developing new products and services tailored to specific client needs can fuel further growth.
- Strategic partnerships: Collaborating with technology firms or other industry players can create new business opportunities.
Recent Acquisitions
In the past three years, AJG has actively pursued acquisitions to strengthen its position and expand its offerings. Some notable acquisitions include:
- Corvus Insurance (2021): A leading provider of cyber insurance solutions, strengthening AJG's presence in the fast-growing cyber insurance market.
- CapSpecialty (2022): A US-based wholesale brokerage specializing in complex and niche insurance risks, expanding AJG's wholesale offerings.
- Ed Broking (2023): A UK-based independent insurance and reinsurance broker with a strong international presence, significantly boosting AJG's global market reach.
These acquisitions demonstrate AJG's strategy to grow through acquisitions that expand their geographic footprint, service offerings, and clientele.
AI-Based Fundamental Rating
Based on an AI-based analysis of various factors, including financials, market position, and future prospects, AJG receives a strong buy rating of 8.5 out of 10.
This rating is primarily driven by:
- Strong financial performance: AJG consistently delivers robust revenue growth, stable earnings, and healthy cash flow.
- Leading market position: AJG holds leading market positions in several insurance segments, giving them a competitive edge.
- Impressive growth trajectory: The company has demonstrated consistent organic growth and is well-positioned for future expansion through acquisitions and innovation.
While challenges such as technological disruption and competition exist, AJG's strong management team, diversified business model, and focus on innovation position them well for future success.
Sources and Disclaimers
This analysis utilized the following sources:
- AJG website
- Securities and Exchange Commission (SEC) filings
- Investor presentations
- News articles and industry reports
This information is for informational purposes only and should not be considered investment advice. The information contained herein may not be accurate or complete, and it should not be relied upon as a basis for making investment decisions. Please consult with a qualified financial professional before making any investment decisions.
AI Summarization is directionally correct and might not be accurate.
Summarized information shown could be a few years old and not current.
Fundamental Rating based on AI could be based on old data.
AI-generated summaries may have inaccuracies (hallucinations). Please verify the information before taking action.
About Arthur J Gallagher & Co
Exchange | NYSE | Headquaters | Rolling Meadows, IL, United States |
IPO Launch date | 1984-09-07 | Chairman & CEO | Mr. J. Patrick Gallagher Jr. |
Sector | Financial Services | Website | https://www.ajg.com |
Industry | Insurance Brokers | Full time employees | 54691 |
Headquaters | Rolling Meadows, IL, United States | ||
Chairman & CEO | Mr. J. Patrick Gallagher Jr. | ||
Website | https://www.ajg.com | ||
Website | https://www.ajg.com | ||
Full time employees | 54691 |
Arthur J. Gallagher & Co., together with its subsidiaries, provides insurance and reinsurance brokerage, consulting, and third-party property/casualty claims settlement and administration services to entities and individuals worldwide. It operates in Brokerage and Risk Management segments. The Brokerage segment offers retail and wholesale insurance and reinsurance brokerage services; assists retail brokers and other non-affiliated brokers in the placement of specialized and hard-to-place insurance; and acts as a brokerage wholesaler, managing general agent, and managing general underwriter for distributing specialized insurance coverages to underwriting enterprises. This segment performs activities, including marketing, underwriting, issuing policies, collecting premiums, appointing and supervising other agents, paying claims, and negotiating reinsurance; and offers services in the areas of insurance and reinsurance placement, risk of loss management, and management of employer sponsored benefit programs. The Risk Management segment provides contract claim settlement and administration services; and claims management, loss control consulting, and insurance property appraisal services. The company offers its services through a network of correspondent brokers and consultants. It serves commercial, industrial, public, religious, and nonprofit entities, as well as underwriting enterprises. Arthur J. Gallagher & Co. was founded in 1927 and is headquartered in Rolling Meadows, Illinois.
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