ARTHUR J GALLAGHER & CO (AJG) Stock Fundamental Analysis
USA - NYSE:AJG - US3635761097 - Common Stock
267.5 USD
-11.5 (-4.12%)
272.5 USD
+5 (+1.87%)
We assign a fundamental rating of 5 out of 10 to AJG. AJG was compared to 147 industry peers in the Insurance industry. While AJG belongs to the best of the industry regarding profitability, there are concerns on its financial health. AJG is valued quite expensively, but it does show have an excellent growth rating.
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.
In the past 5 years AJG has always been profitable.
In the past 5 years AJG always reported a positive cash flow from operatings.
1.2 Ratios
AJG has a Return On Assets (2.05%) which is comparable to the rest of the industry.
The Return On Equity of AJG (7.13%) is worse than 65.31% of its industry peers.
AJG has a Return On Invested Capital of 6.72%. This is amongst the best in the industry. AJG outperforms 87.76% 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 4.49%.
| 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 76.19% of its industry peers.
AJG's Profit Margin has improved in the last couple of years.
AJG has a better Operating Margin (25.44%) than 91.16% of its industry peers.
In the last couple of years the Operating Margin of AJG has grown nicely.
AJG has a Gross Margin of 46.51%. This is amongst the best in the industry. AJG outperforms 93.88% of its industry peers.
In the last couple of years the Gross Margin of AJG has grown nicely.
| 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.
The number of shares outstanding for AJG has been increased compared to 1 year ago.
The number of shares outstanding for AJG has been increased compared to 5 years ago.
The debt/assets ratio for AJG is higher compared to a year ago.
2.2 Solvency
AJG has an Altman-Z score of 1.37. This is a bad value and indicates that AJG is not financially healthy and even has some risk of bankruptcy.
AJG's Altman-Z score of 1.37 is amongst the best of the industry. AJG outperforms 81.63% of its industry peers.
AJG has a debt to FCF ratio of 6.54. This is a slightly negative value and a sign of low solvency as AJG would need 6.54 years to pay back of 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 62.59% of its industry peers.
AJG has a Debt/Equity ratio of 0.53. This is a neutral value indicating 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 70.07% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 6.54 | ||
| Altman-Z | 1.37 |
ROIC/WACC0.86
WACC7.85%
2.3 Liquidity
A Current Ratio of 1.36 indicates that AJG should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.36, AJG belongs to the top of the industry, outperforming 84.35% of the companies in the same industry.
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.
With an excellent Quick ratio value of 1.36, AJG belongs to the best of the industry, outperforming 84.35% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.36 | ||
| Quick Ratio | 1.36 |
3. Growth
3.1 Past
AJG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.23%, which is quite good.
The Earnings Per Share has been growing by 22.61% on average over the past years. This is a very strong growth
AJG shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 13.83%.
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
Based on estimates for the next years, AJG will show a quite strong growth in Earnings Per Share. The EPS will grow by 16.30% on average per year.
Based on estimates for the next years, AJG will show a quite strong growth in Revenue. The Revenue will grow by 13.92% on average per year.
EPS Next Y10.86%
EPS Next 2Y16.69%
EPS Next 3Y15.17%
EPS Next 5Y16.3%
Revenue Next Year22.82%
Revenue Next 2Y22.23%
Revenue Next 3Y17.82%
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
A Price/Earnings ratio of 25.75 indicates a quite expensive valuation of AJG.
Compared to the rest of the industry, the Price/Earnings ratio of AJG indicates a slightly more expensive valuation: AJG is more expensive than 77.55% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 26.83. AJG is around the same levels.
Based on the Price/Forward Earnings ratio of 19.37, the valuation of AJG can be described as rather expensive.
70.75% of the companies in the same industry are cheaper than AJG, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.88, AJG is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.75 | ||
| Fwd PE | 19.37 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, AJG is valued a bit more expensive than the industry average as 62.59% of the companies are valued more cheaply.
68.03% of the companies in the same industry are cheaper than AJG, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 34.78 | ||
| EV/EBITDA | 17.15 |
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.
A more expensive valuation may be justified as AJG's earnings are expected to grow with 15.17% in the coming years.
PEG (NY)2.37
PEG (5Y)1.14
EPS Next 2Y16.69%
EPS Next 3Y15.17%
5. Dividend
5.1 Amount
With a yearly dividend of 0.92%, AJG is not a good candidate for dividend investing.
AJG's Dividend Yield is comparable with the industry average which is at 3.26.
Compared to an average S&P500 Dividend Yield of 2.30, AJG's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.92% |
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
36.32% of the earnings are spent on dividend by AJG. This is a low number and sustainable payout ratio.
The dividend of AJG is growing, but earnings are growing more, so the dividend growth is sustainable.
DP36.32%
EPS Next 2Y16.69%
EPS Next 3Y15.17%
267.5
-11.5 (-4.12%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners90.89%
Inst Owner Change-0.24%
Ins Owners0.6%
Ins Owner Change0.38%
Market Cap68.58B
Revenue(TTM)12.47B
Net Income(TTM)1.64B
Analysts75
Price Target348.36 (30.23%)
Short Float %1.5%
Short Ratio2.81
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.92% |
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)0.5%
PT rev (3m)-0.95%
EPS NQ rev (1m)3.76%
EPS NQ rev (3m)5.97%
EPS NY rev (1m)-0.08%
EPS NY rev (3m)0.83%
Revenue NQ rev (1m)5.22%
Revenue NQ rev (3m)6.66%
Revenue NY rev (1m)1.14%
Revenue NY rev (3m)0.95%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.75 | ||
| Fwd PE | 19.37 | ||
| P/S | 5.5 | ||
| P/FCF | 34.78 | ||
| P/OCF | 32.35 | ||
| P/B | 2.98 | ||
| P/tB | 16.52 | ||
| EV/EBITDA | 17.15 |
EPS(TTM)10.39
EY3.88%
EPS(NY)13.81
Fwd EY5.16%
FCF(TTM)7.69
FCFY2.88%
OCF(TTM)8.27
OCFY3.09%
SpS48.65
BVpS89.81
TBVpS16.19
PEG (NY)2.37
PEG (5Y)1.14
Graham Number144.9
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%
ROICexgc growth 3Y31.7%
ROICexgc 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 | 1.37 |
F-Score6
WACC7.85%
ROIC/WACC0.86
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 Y10.86%
EPS Next 2Y16.69%
EPS Next 3Y15.17%
EPS Next 5Y16.3%
Revenue 1Y (TTM)13.83%
Revenue growth 3Y12.07%
Revenue growth 5Y9.94%
Sales Q2Q%17.86%
Revenue Next Year22.82%
Revenue Next 2Y22.23%
Revenue Next 3Y17.82%
Revenue Next 5Y13.92%
EBIT growth 1Y51.53%
EBIT growth 3Y27.14%
EBIT growth 5Y27.83%
EBIT Next Year67.25%
EBIT Next 3Y31.74%
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%
ARTHUR J GALLAGHER & CO / AJG FAQ
Can you provide the ChartMill fundamental rating for ARTHUR J GALLAGHER & CO?
ChartMill assigns a fundamental rating of 5 / 10 to AJG.
What is the valuation status for AJG stock?
ChartMill assigns a valuation rating of 1 / 10 to ARTHUR J GALLAGHER & CO (AJG). This can be considered as Overvalued.
How profitable is ARTHUR J GALLAGHER & CO (AJG) stock?
ARTHUR J GALLAGHER & CO (AJG) has a profitability rating of 7 / 10.
How financially healthy is ARTHUR J GALLAGHER & CO?
The financial health rating of ARTHUR J GALLAGHER & CO (AJG) is 3 / 10.
What is the earnings growth outlook for ARTHUR J GALLAGHER & CO?
The Earnings per Share (EPS) of ARTHUR J GALLAGHER & CO (AJG) is expected to grow by 10.86% in the next year.