ARTHUR J GALLAGHER & CO (AJG) Stock Fundamental Analysis
USA - NYSE:AJG - US3635761097 - Common Stock
292.66 USD
+1.2 (+0.41%)
292.66 USD
0 (0%)
Overall AJG gets a fundamental rating of 5 out of 10. We evaluated AJG against 146 industry peers in the Insurance industry. AJG has an excellent profitability rating, 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.
In the past year AJG had a positive cash flow from operations.
AJG had positive earnings in each of the past 5 years.
Each year in the past 5 years AJG had a positive operating cash flow.
1.2 Ratios
AJG has a Return On Assets (2.05%) which is comparable to the rest of the industry.
AJG has a worse Return On Equity (7.13%) than 65.75% of its industry peers.
AJG has a Return On Invested Capital of 6.72%. This is amongst the best in the industry. AJG outperforms 88.36% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AJG is above the industry average of 4.47%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.05% | ||
| ROE | 7.13% | ||
| ROIC | 6.72% |
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 better Profit Margin (13.16%) than 76.03% of its industry peers.
AJG's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 25.44%, AJG belongs to the top of the industry, outperforming 91.78% of the companies in the same industry.
In the last couple of years the Operating Margin of AJG has grown nicely.
Looking at the Gross Margin, with a value of 46.51%, AJG belongs to the top of the industry, outperforming 93.84% of the companies in the same industry.
AJG's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.44% | ||
| PM (TTM) | 13.16% | ||
| GM | 46.51% |
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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so AJG is destroying value.
AJG has more shares outstanding than it did 1 year ago.
AJG has more shares outstanding than it did 5 years ago.
The debt/assets ratio for AJG is higher compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 1.40, we must say that AJG is in the distress zone and has some risk of bankruptcy.
The Altman-Z score of AJG (1.40) is better than 82.19% of its industry peers.
The Debt to FCF ratio of AJG is 6.54, which is on the high side as it means it would take AJG, 6.54 years of fcf income to pay off all of its debts.
AJG has a Debt to FCF ratio of 6.54. This is in the lower half of the industry: AJG underperforms 64.38% of its industry peers.
A Debt/Equity ratio of 0.53 indicates that AJG is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.53, AJG is doing worse than 70.55% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 6.54 | ||
| Altman-Z | 1.4 |
ROIC/WACC0.85
WACC7.93%
2.3 Liquidity
AJG has a Current Ratio of 1.36. This is a normal value and indicates that AJG is financially healthy and should not expect problems in meeting its short term obligations.
AJG's Current ratio of 1.36 is amongst the best of the industry. AJG outperforms 84.25% of its industry peers.
AJG has a Quick Ratio of 1.36. 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 Quick ratio of 1.36. This is amongst the best in the industry. AJG outperforms 84.25% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.36 | ||
| Quick Ratio | 1.36 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 8.23% 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 13.83% in the last year.
AJG shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 9.94% yearly.
EPS 1Y (TTM)8.23%
EPS 3Y22.62%
EPS 5Y22.61%
EPS Q2Q%3.1%
Revenue 1Y (TTM)13.83%
Revenue growth 3Y12.07%
Revenue growth 5Y9.94%
Sales Q2Q%17.86%
3.2 Future
AJG is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 15.95% yearly.
The Revenue is expected to grow by 13.92% on average over the next years. This is quite good.
EPS Next Y10.02%
EPS Next 2Y16.33%
EPS Next 3Y14.77%
EPS Next 5Y15.95%
Revenue Next Year21.43%
Revenue Next 2Y22.07%
Revenue Next 3Y17.6%
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.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 28.17, which means the current valuation is very expensive for AJG.
Based on the Price/Earnings ratio, AJG is valued a bit more expensive than the industry average as 78.08% of the companies are valued more cheaply.
When comparing the Price/Earnings ratio of AJG to the average of the S&P500 Index (27.20), we can say AJG is valued inline with the index average.
Based on the Price/Forward Earnings ratio of 21.33, the valuation of AJG can be described as rather expensive.
Based on the Price/Forward Earnings ratio, AJG is valued a bit more expensive than the industry average as 73.29% of the companies are valued more cheaply.
AJG's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 22.70.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.17 | ||
| Fwd PE | 21.33 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, AJG is valued a bit more expensive than the industry average as 63.01% of the companies are valued more cheaply.
Based on the Price/Free Cash Flow ratio, AJG is valued a bit more expensive than 69.86% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 38.05 | ||
| EV/EBITDA | 18.01 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
AJG has a very decent profitability rating, which may justify a higher PE ratio.
AJG's earnings are expected to grow with 14.77% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.81
PEG (5Y)1.25
EPS Next 2Y16.33%
EPS Next 3Y14.77%
5. Dividend
5.1 Amount
With a yearly dividend of 0.86%, AJG is not a good candidate for dividend investing.
AJG's Dividend Yield is comparable with the industry average which is at 3.43.
With a Dividend Yield of 0.86, AJG pays less dividend than the S&P500 average, which is at 2.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.86% |
5.2 History
The dividend of AJG has a limited annual growth rate of 5.46%.
AJG has paid a dividend for at least 10 years, which is 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
AJG pays out 36.32% of its income as dividend. This is a sustainable payout ratio.
AJG's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP36.32%
EPS Next 2Y16.33%
EPS Next 3Y14.77%
292.66
+1.2 (+0.41%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners91.37%
Inst Owner Change-1.47%
Ins Owners0.59%
Ins Owner Change4.3%
Market Cap75.03B
Analysts75.65
Price Target346.64 (18.44%)
Short Float %1.46%
Short Ratio2.55
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.86% |
Yearly Dividend2.25
Dividend Growth(5Y)5.46%
DP36.32%
Div Incr Years14
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-0.57%
Min EPS beat(2)-2.57%
Max EPS beat(2)1.43%
EPS beat(4)2
Avg EPS beat(4)0.27%
Min EPS beat(4)-2.57%
Max EPS beat(4)3.69%
EPS beat(8)4
Avg EPS beat(8)0.38%
EPS beat(12)7
Avg EPS beat(12)-0.62%
EPS beat(16)11
Avg EPS beat(16)0.38%
Revenue beat(2)0
Avg Revenue beat(2)-0.86%
Min Revenue beat(2)-0.9%
Max Revenue beat(2)-0.81%
Revenue beat(4)0
Avg Revenue beat(4)-1.44%
Min Revenue beat(4)-2.19%
Max Revenue beat(4)-0.81%
Revenue beat(8)0
Avg Revenue beat(8)-1.32%
Revenue beat(12)2
Avg Revenue beat(12)-0.52%
Revenue beat(16)6
Avg Revenue beat(16)1.13%
PT rev (1m)0.49%
PT rev (3m)-1.58%
EPS NQ rev (1m)0.96%
EPS NQ rev (3m)2.38%
EPS NY rev (1m)0.07%
EPS NY rev (3m)-0.4%
Revenue NQ rev (1m)0.64%
Revenue NQ rev (3m)1.38%
Revenue NY rev (1m)-0.12%
Revenue NY rev (3m)-0.67%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.17 | ||
| Fwd PE | 21.33 | ||
| P/S | 6.02 | ||
| P/FCF | 38.05 | ||
| P/OCF | 35.39 | ||
| P/B | 3.26 | ||
| P/tB | 18.07 | ||
| EV/EBITDA | 18.01 |
EPS(TTM)10.39
EY3.55%
EPS(NY)13.72
Fwd EY4.69%
FCF(TTM)7.69
FCFY2.63%
OCF(TTM)8.27
OCFY2.83%
SpS48.65
BVpS89.81
TBVpS16.19
PEG (NY)2.81
PEG (5Y)1.25
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.05% | ||
| ROE | 7.13% | ||
| ROCE | 8.44% | ||
| ROIC | 6.72% | ||
| ROICexc | 10.82% | ||
| ROICexgc | 55.53% | ||
| OM | 25.44% | ||
| PM (TTM) | 13.16% | ||
| GM | 46.51% | ||
| FCFM | 15.81% |
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 | 0.53 | ||
| Debt/FCF | 6.54 | ||
| Debt/EBITDA | 3 | ||
| Cap/Depr | 16.31% | ||
| Cap/Sales | 1.19% | ||
| Interest Coverage | 7.87 | ||
| Cash Conversion | 51.96% | ||
| Profit Quality | 120.15% | ||
| Current Ratio | 1.36 | ||
| Quick Ratio | 1.36 | ||
| Altman-Z | 1.4 |
F-Score6
WACC7.93%
ROIC/WACC0.85
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)8.23%
EPS 3Y22.62%
EPS 5Y22.61%
EPS Q2Q%3.1%
EPS Next Y10.02%
EPS Next 2Y16.33%
EPS Next 3Y14.77%
EPS Next 5Y15.95%
Revenue 1Y (TTM)13.83%
Revenue growth 3Y12.07%
Revenue growth 5Y9.94%
Sales Q2Q%17.86%
Revenue Next Year21.43%
Revenue Next 2Y22.07%
Revenue Next 3Y17.6%
Revenue Next 5Y13.92%
EBIT growth 1Y51.53%
EBIT growth 3Y27.14%
EBIT growth 5Y27.83%
EBIT Next Year66.7%
EBIT Next 3Y30.57%
EBIT Next 5Y20.35%
FCF growth 1Y21.9%
FCF growth 3Y15.71%
FCF growth 5Y20.01%
OCF growth 1Y17.9%
OCF growth 3Y14.87%
OCF growth 5Y18.21%