ARTHUR J GALLAGHER & CO (AJG) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:AJG - US3635761097 - Common Stock
253.21 USD
+2.83 (+1.13%)
253.21 USD
0 (0%)
Overall AJG gets a fundamental rating of 5 out of 10. We evaluated AJG against 149 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
- In the past year AJG was profitable.
- 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 of 2.03%. This is comparable to the rest of the industry: AJG outperforms 53.02% of its industry peers.
- AJG has a Return On Equity of 6.90%. This is in the lower half of the industry: AJG underperforms 69.80% of its industry peers.
- AJG has a Return On Invested Capital of 6.70%. This is amongst the best in the industry. AJG outperforms 86.58% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for AJG is significantly below the industry average of 14.92%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.03% | ||
| ROE | 6.9% | ||
| ROIC | 6.7% |
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 (12.29%) than 66.44% of its industry peers.
- In the last couple of years the Profit Margin of AJG has grown nicely.
- AJG's Operating Margin of 24.80% is amongst the best of the industry. AJG outperforms 83.22% of its industry peers.
- In the last couple of years the Operating Margin of AJG has grown nicely.
- AJG has a Gross Margin of 46.39%. This is amongst the best in the industry. AJG outperforms 93.29% of its industry peers.
- AJG's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 24.8% | ||
| PM (TTM) | 12.29% | ||
| GM | 46.39% |
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
- With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), AJG is destroying value.
- AJG has more shares outstanding than it did 1 year ago.
- The number of shares outstanding for AJG has been increased compared to 5 years ago.
- AJG has a worse debt/assets ratio than last year.
2.2 Solvency
- AJG has an Altman-Z score of 1.14. 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 (1.14) than 79.87% of its industry peers.
- The Debt to FCF ratio of AJG is 7.42, which is on the high side as it means it would take AJG, 7.42 years of fcf income to pay off all of its debts.
- AJG's Debt to FCF ratio of 7.42 is on the low side compared to the rest of the industry. AJG is outperformed by 67.79% 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.
- AJG's Debt to Equity ratio of 0.53 is on the low side compared to the rest of the industry. AJG is outperformed by 73.83% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 7.42 | ||
| Altman-Z | 1.14 |
ROIC/WACC0.84
WACC8.01%
2.3 Liquidity
- AJG has a Current Ratio of 1.06. This is a normal value and indicates that AJG is financially healthy and should not expect problems in meeting its short term obligations.
- With a decent Current ratio value of 1.06, AJG is doing good in the industry, outperforming 79.19% of the companies in the same industry.
- A Quick Ratio of 1.06 indicates that AJG should not have too much problems paying its short term obligations.
- Looking at the Quick ratio, with a value of 1.06, AJG is in the better half of the industry, outperforming 79.19% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.06 | ||
| Quick Ratio | 1.06 |
3. Growth
3.1 Past
- The Earnings Per Share has been growing slightly by 5.98% over the past year.
- AJG shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 22.61% yearly.
- Looking at the last year, AJG shows a quite strong growth in Revenue. The Revenue has grown by 15.61% in the last year.
- The Revenue has been growing by 9.94% on average over the past years. This is quite good.
EPS 1Y (TTM)5.98%
EPS 3Y22.62%
EPS 5Y22.61%
EPS Q2Q%2.65%
Revenue 1Y (TTM)15.61%
Revenue growth 3Y12.07%
Revenue growth 5Y9.94%
Sales Q2Q%21.48%
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 13.90% on average per year.
EPS Next Y6.46%
EPS Next 2Y14.99%
EPS Next 3Y14.1%
EPS Next 5Y16.3%
Revenue Next Year21.15%
Revenue Next 2Y21.75%
Revenue Next 3Y17.65%
Revenue Next 5Y13.9%
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
- AJG is valuated rather expensively with a Price/Earnings ratio of 24.23.
- Based on the Price/Earnings ratio, AJG is valued a bit more expensive than the industry average as 73.15% of the companies are valued more cheaply.
- Compared to an average S&P500 Price/Earnings ratio of 27.21, AJG is valued at the same level.
- With a Price/Forward Earnings ratio of 18.89, AJG is valued on the expensive side.
- Based on the Price/Forward Earnings ratio, AJG is valued a bit more expensive than 70.47% of the companies in the same industry.
- When comparing the Price/Forward Earnings ratio of AJG to the average of the S&P500 Index (24.26), we can say AJG is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.23 | ||
| Fwd PE | 18.89 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AJG indicates a slightly more expensive valuation: AJG is more expensive than 67.11% of the companies listed in the same industry.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of AJG indicates a slightly more expensive valuation: AJG is more expensive than 71.81% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 36.79 | ||
| EV/EBITDA | 18.19 |
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.
- A more expensive valuation may be justified as AJG's earnings are expected to grow with 14.10% in the coming years.
PEG (NY)3.75
PEG (5Y)1.07
EPS Next 2Y14.99%
EPS Next 3Y14.1%
5. Dividend
5.1 Amount
- AJG has a Yearly Dividend Yield of 1.04%.
- Compared to an average industry Dividend Yield of 2.43, AJG has a dividend in line with its industry peers.
- Compared to an average S&P500 Dividend Yield of 1.81, AJG's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.04% |
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 their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)5.46%
Div Incr Years14
Div Non Decr Years34
5.3 Sustainability
- 39.43% 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.
DP39.43%
EPS Next 2Y14.99%
EPS Next 3Y14.1%
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 of ARTHUR J GALLAGHER & CO (AJG) stock?
ChartMill assigns a valuation rating of 2 / 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.
Can you provide the dividend sustainability for AJG stock?
The dividend rating of ARTHUR J GALLAGHER & CO (AJG) is 6 / 10 and the dividend payout ratio is 39.43%.