ARTHUR J GALLAGHER & CO (AJG) Stock Fundamental Analysis
NYSE:AJG - New York Stock Exchange, Inc. - US3635761097 - Common Stock - Currency: USD
Overall AJG gets a fundamental rating of 5 out of 10. We evaluated AJG against 144 industry peers in the Insurance industry. AJG scores excellent on profitability, but there are concerns on its financial health. AJG shows excellent growth, but is valued quite expensive already.
1. Profitability
1.1 Basic Checks
AJG had positive earnings in the past year.
AJG had a positive operating cash flow in the past year.
In the past 5 years AJG has always been profitable.
AJG had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With a Return On Assets value of 2.10%, AJG perfoms like the industry average, outperforming 51.39% of the companies in the same industry.
AJG's Return On Equity of 6.98% is on the low side compared to the rest of the industry. AJG is outperformed by 67.36% of its industry peers.
AJG has a better Return On Invested Capital (6.31%) than 88.19% of its industry peers.
AJG had an Average Return On Invested Capital over the past 3 years of 7.35%. This is above the industry average of 4.07%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.1% | ||
| ROE | 6.98% | ||
| ROIC | 6.31% |
ROA(3y)2.35%
ROA(5y)2.69%
ROE(3y)9.48%
ROE(5y)10.47%
ROIC(3y)7.35%
ROIC(5y)7.18%
1.3 Margins
AJG has a Profit Margin of 12.96%. This is in the better half of the industry: AJG outperforms 75.69% of its industry peers.
AJG's Profit Margin has improved in the last couple of years.
With an excellent Operating Margin value of 24.43%, AJG belongs to the best of the industry, outperforming 87.50% of the companies in the same industry.
AJG's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 45.97%, AJG belongs to the top of the industry, outperforming 93.75% of the companies in the same industry.
In the last couple of years the Gross Margin of AJG has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 24.43% | ||
| PM (TTM) | 12.96% | ||
| GM | 45.97% |
OM growth 3Y13.45%
OM growth 5Y16.28%
PM growth 3Y4.65%
PM growth 5Y6.37%
GM growth 3Y6.97%
GM growth 5Y6.66%
2. Health
2.1 Basic Checks
AJG has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, AJG has more shares outstanding
The number of shares outstanding for AJG has been increased compared to 5 years ago.
Compared to 1 year ago, AJG has a worse debt to assets ratio.
2.2 Solvency
AJG has an Altman-Z score of 1.61. This is a bad value and indicates that AJG is not financially healthy and even has some risk of bankruptcy.
AJG has a better Altman-Z score (1.61) than 87.50% of its industry peers.
The Debt to FCF ratio of AJG is 5.18, which is a neutral value as it means it would take AJG, 5.18 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of AJG (5.18) is worse than 66.67% of its industry peers.
AJG has a Debt/Equity ratio of 0.56. This is a neutral value indicating AJG is somewhat dependend on debt financing.
AJG has a worse Debt to Equity ratio (0.56) than 73.61% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.56 | ||
| Debt/FCF | 5.18 | ||
| Altman-Z | 1.61 |
ROIC/WACC0.69
WACC9.17%
2.3 Liquidity
AJG has a Current Ratio of 1.44. This is a normal value and indicates that AJG is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.44, AJG belongs to the top of the industry, outperforming 88.19% of the companies in the same industry.
AJG has a Quick Ratio of 1.44. This is a normal value and indicates that AJG is financially healthy and should not expect problems in meeting its short term obligations.
AJG has a better Quick ratio (1.44) than 88.19% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.44 | ||
| Quick Ratio | 1.44 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 11.69% over the past year.
Measured over the past years, AJG shows a very strong growth in Earnings Per Share. The EPS has been growing by 22.61% on average per year.
Looking at the last year, AJG shows a quite strong growth in Revenue. The Revenue has grown by 13.21% in the last year.
Measured over the past years, AJG shows a quite strong growth in Revenue. The Revenue has been growing by 9.94% on average per year.
EPS 1Y (TTM)11.69%
EPS 3Y22.62%
EPS 5Y22.61%
EPS Q2Q%5.16%
Revenue 1Y (TTM)13.21%
Revenue growth 3Y12.07%
Revenue growth 5Y9.94%
Sales Q2Q%15.35%
3.2 Future
The Earnings Per Share is expected to grow by 15.95% on average over the next years. This is quite good.
The Revenue is expected to grow by 13.92% on average over the next years. This is quite good.
EPS Next Y10.21%
EPS Next 2Y16.34%
EPS Next 3Y14.65%
EPS Next 5Y15.95%
Revenue Next Year21.79%
Revenue Next 2Y22.68%
Revenue Next 3Y18.04%
Revenue Next 5Y13.92%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
AJG is valuated quite expensively with a Price/Earnings ratio of 31.02.
Based on the Price/Earnings ratio, AJG is valued a bit more expensive than 77.08% of the companies in the same industry.
When comparing the Price/Earnings ratio of AJG to the average of the S&P500 Index (27.15), we can say AJG is valued inline with the index average.
With a Price/Forward Earnings ratio of 23.32, AJG is valued on the expensive side.
Based on the Price/Forward Earnings ratio, AJG is valued a bit more expensive than the industry average as 73.61% of the companies are valued more cheaply.
The average S&P500 Price/Forward Earnings ratio is at 21.60. AJG is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.02 | ||
| Fwd PE | 23.32 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, AJG is valued a bit more expensive than the industry average as 62.50% of the companies are valued more cheaply.
Based on the Price/Free Cash Flow ratio, AJG is valued a bit more expensive than 74.31% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 32.47 | ||
| EV/EBITDA | 20.28 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of AJG may justify a higher PE ratio.
AJG's earnings are expected to grow with 14.65% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.04
PEG (5Y)1.37
EPS Next 2Y16.34%
EPS Next 3Y14.65%
5. Dividend
5.1 Amount
With a yearly dividend of 0.82%, AJG is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 3.51, AJG is paying slightly less dividend.
Compared to an average S&P500 Dividend Yield of 2.42, AJG's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.82% |
5.2 History
The dividend of AJG has a limited annual growth rate of 5.46%.
AJG has been paying a dividend for at least 10 years, so it has a reliable track record.
AJG has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)5.46%
Div Incr Years14
Div Non Decr Years34
5.3 Sustainability
35.97% of the earnings are spent on dividend by AJG. This is a low number and sustainable payout ratio.
AJG's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP35.97%
EPS Next 2Y16.34%
EPS Next 3Y14.65%
320.12
+2.39 (+0.75%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners91.46%
Inst Owner Change-0.59%
Ins Owners0.59%
Ins Owner Change3.24%
Market Cap81.98B
Analysts75.65
Price Target352.57 (10.14%)
Short Float %1.45%
Short Ratio2.65
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.82% |
Yearly Dividend2.25
Dividend Growth(5Y)5.46%
DP35.97%
Div Incr Years14
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)2.56%
Min EPS beat(2)1.43%
Max EPS beat(2)3.69%
EPS beat(4)2
Avg EPS beat(4)0.89%
Min EPS beat(4)-1.48%
Max EPS beat(4)3.69%
EPS beat(8)5
Avg EPS beat(8)0.83%
EPS beat(12)8
Avg EPS beat(12)-0.39%
EPS beat(16)12
Avg EPS beat(16)0.64%
Revenue beat(2)0
Avg Revenue beat(2)-1.39%
Min Revenue beat(2)-1.87%
Max Revenue beat(2)-0.9%
Revenue beat(4)0
Avg Revenue beat(4)-1.74%
Min Revenue beat(4)-2.19%
Max Revenue beat(4)-0.9%
Revenue beat(8)1
Avg Revenue beat(8)-0.94%
Revenue beat(12)3
Avg Revenue beat(12)-0.43%
Revenue beat(16)7
Avg Revenue beat(16)2.56%
PT rev (1m)1.45%
PT rev (3m)7.51%
EPS NQ rev (1m)-0.72%
EPS NQ rev (3m)-8.06%
EPS NY rev (1m)-0.22%
EPS NY rev (3m)-4.03%
Revenue NQ rev (1m)-0.37%
Revenue NQ rev (3m)-7.11%
Revenue NY rev (1m)0.93%
Revenue NY rev (3m)-7.47%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 31.02 | ||
| Fwd PE | 23.32 | ||
| P/S | 6.82 | ||
| P/FCF | 32.47 | ||
| P/OCF | 30.76 | ||
| P/B | 3.67 | ||
| P/tB | 16.16 | ||
| EV/EBITDA | 20.28 |
EPS(TTM)10.32
EY3.22%
EPS(NY)13.73
Fwd EY4.29%
FCF(TTM)9.86
FCFY3.08%
OCF(TTM)10.41
OCFY3.25%
SpS46.96
BVpS87.15
TBVpS19.81
PEG (NY)3.04
PEG (5Y)1.37
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.1% | ||
| ROE | 6.98% | ||
| ROCE | 7.93% | ||
| ROIC | 6.31% | ||
| ROICexc | 11.45% | ||
| ROICexgc | 71.77% | ||
| OM | 24.43% | ||
| PM (TTM) | 12.96% | ||
| GM | 45.97% | ||
| FCFM | 21% |
ROA(3y)2.35%
ROA(5y)2.69%
ROE(3y)9.48%
ROE(5y)10.47%
ROIC(3y)7.35%
ROIC(5y)7.18%
ROICexc(3y)9.13%
ROICexc(5y)8.37%
ROICexgc(3y)48.09%
ROICexgc(5y)40.27%
ROCE(3y)9.3%
ROCE(5y)9.1%
ROICexcg growth 3Y31.7%
ROICexcg growth 5Y18.43%
ROICexc growth 3Y18.63%
ROICexc growth 5Y11.64%
OM growth 3Y13.45%
OM growth 5Y16.28%
PM growth 3Y4.65%
PM growth 5Y6.37%
GM growth 3Y6.97%
GM growth 5Y6.66%
F-Score6
Asset Turnover0.16
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.56 | ||
| Debt/FCF | 5.18 | ||
| Debt/EBITDA | 3.29 | ||
| Cap/Depr | 15.81% | ||
| Cap/Sales | 1.17% | ||
| Interest Coverage | 7 | ||
| Cash Conversion | 69.66% | ||
| Profit Quality | 161.99% | ||
| Current Ratio | 1.44 | ||
| Quick Ratio | 1.44 | ||
| Altman-Z | 1.61 |
F-Score6
WACC9.17%
ROIC/WACC0.69
Cap/Depr(3y)25.04%
Cap/Depr(5y)23.1%
Cap/Sales(3y)1.76%
Cap/Sales(5y)1.65%
Profit Quality(3y)176.95%
Profit Quality(5y)182.63%
High Growth Momentum
Growth
EPS 1Y (TTM)11.69%
EPS 3Y22.62%
EPS 5Y22.61%
EPS Q2Q%5.16%
EPS Next Y10.21%
EPS Next 2Y16.34%
EPS Next 3Y14.65%
EPS Next 5Y15.95%
Revenue 1Y (TTM)13.21%
Revenue growth 3Y12.07%
Revenue growth 5Y9.94%
Sales Q2Q%15.35%
Revenue Next Year21.79%
Revenue Next 2Y22.68%
Revenue Next 3Y18.04%
Revenue Next 5Y13.92%
EBIT growth 1Y47.14%
EBIT growth 3Y27.14%
EBIT growth 5Y27.83%
EBIT Next Year68.3%
EBIT Next 3Y31.21%
EBIT Next 5Y20.35%
FCF growth 1Y16.76%
FCF growth 3Y15.71%
FCF growth 5Y20.01%
OCF growth 1Y14.04%
OCF growth 3Y14.87%
OCF growth 5Y18.21%