ARTHUR J GALLAGHER & CO (AJG) Stock Fundamental Analysis
NYSE:AJG - New York Stock Exchange, Inc. - US3635761097 - Common Stock
We assign a fundamental rating of 5 out of 10 to AJG. AJG was compared to 143 industry peers in the Insurance industry. AJG has an excellent profitability rating, but there are some minor concerns on its financial health. While showing a medium growth rate, AJG is valued expensive at the moment.
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 Return On Equity (9.62%) which is comparable to the rest of the industry.
AJG has a better Return On Invested Capital (8.17%) than 90.07% of its industry peers.
The Average Return On Invested Capital over the past 3 years for AJG is above the industry average of 4.61%.
The last Return On Invested Capital (8.17%) for AJG is above the 3 year average (7.65%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.05% | ||
| ROE | 9.62% | ||
| ROIC | 8.17% |
ROA(3y)2.5%
ROA(5y)2.92%
ROE(3y)10.61%
ROE(5y)11.61%
ROIC(3y)7.65%
ROIC(5y)7.37%
1.3 Margins
Looking at the Profit Margin, with a value of 10.40%, AJG is in the better half of the industry, outperforming 62.41% of the companies in the same industry.
In the last couple of years the Profit Margin of AJG has remained more or less at the same level.
AJG's Operating Margin of 19.52% is fine compared to the rest of the industry. AJG outperforms 78.01% of its industry peers.
In the last couple of years the Operating Margin of AJG has grown nicely.
AJG has a Gross Margin of 45.10%. This is amongst the best in the industry. AJG outperforms 94.33% of its industry peers.
In the last couple of years the Gross Margin of AJG has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.52% | ||
| PM (TTM) | 10.4% | ||
| GM | 45.1% |
OM growth 3Y2.39%
OM growth 5Y14.92%
PM growth 3Y-6.27%
PM growth 5Y1.05%
GM growth 3Y6.87%
GM growth 5Y9.78%
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.
The number of shares outstanding for AJG has been increased compared to 1 year ago.
AJG has more shares outstanding than it did 5 years ago.
The debt/assets ratio for AJG has been reduced compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 1.47, we must say that AJG is in the distress zone and has some risk of bankruptcy.
AJG has a Altman-Z score of 1.47. This is amongst the best in the industry. AJG outperforms 82.27% of its industry peers.
The Debt to FCF ratio of AJG is 3.45, which is a good value as it means it would take AJG, 3.45 years of fcf income to pay off all of its debts.
AJG has a Debt to FCF ratio of 3.45. This is in the lower half of the industry: AJG underperforms 61.70% of its industry peers.
A Debt/Equity ratio of 0.66 indicates that AJG is somewhat dependend on debt financing.
AJG's Debt to Equity ratio of 0.66 is on the low side compared to the rest of the industry. AJG is outperformed by 81.56% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.66 | ||
| Debt/FCF | 3.45 | ||
| Altman-Z | 1.47 |
ROIC/WACC0.94
WACC8.72%
2.3 Liquidity
A Current Ratio of 1.06 indicates that AJG should not have too much problems paying its short term obligations.
AJG's Current ratio of 1.06 is fine compared to the rest of the industry. AJG outperforms 78.01% of its industry peers.
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 78.01% 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 grown by an nice 19.81% over the past year.
AJG shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 20.54% yearly.
Looking at the last year, AJG shows a quite strong growth in Revenue. The Revenue has grown by 16.57% in the last year.
Measured over the past years, AJG shows a small growth in Revenue. The Revenue has been growing by 7.75% on average per year.
EPS 1Y (TTM)19.81%
EPS 3Y22.9%
EPS 5Y20.54%
EPS Q2Q%13%
Revenue 1Y (TTM)16.57%
Revenue growth 3Y12.87%
Revenue growth 5Y7.75%
Sales Q2Q%11.86%
3.2 Future
The Earnings Per Share is expected to grow by 14.82% on average over the next years. This is quite good.
The Revenue is expected to grow by 11.10% on average over the next years. This is quite good.
EPS Next Y16.09%
EPS Next 2Y14.81%
EPS Next 3Y14.18%
EPS Next 5Y14.82%
Revenue Next Year14.71%
Revenue Next 2Y16.56%
Revenue Next 3Y14.71%
Revenue Next 5Y11.1%
3.3 Evolution
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of 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
With a Price/Earnings ratio of 30.00, AJG can be considered very expensive at the moment.
Based on the Price/Earnings ratio, AJG is valued a bit more expensive than 76.60% of the companies in the same industry.
AJG's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 28.29.
Based on the Price/Forward Earnings ratio of 25.56, the valuation of AJG can be described as expensive.
74.47% of the companies in the same industry are cheaper than AJG, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of AJG to the average of the S&P500 Index (24.44), we can say AJG is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30 | ||
| Fwd PE | 25.56 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, AJG is valued a bit more expensive than the industry average as 63.83% of the companies are valued more cheaply.
Based on the Price/Free Cash Flow ratio, AJG is valued a bit more expensive than the industry average as 69.50% of the companies are valued more cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.88 | ||
| EV/EBITDA | 26.53 |
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 an outstanding 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 14.18% in the coming years.
PEG (NY)1.86
PEG (5Y)1.46
EPS Next 2Y14.81%
EPS Next 3Y14.18%
5. Dividend
5.1 Amount
AJG has a yearly dividend return of 0.81%, which is pretty low.
Compared to an average industry Dividend Yield of 2.99, AJG is paying slightly less dividend.
Compared to an average S&P500 Dividend Yield of 2.28, AJG's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.81% |
5.2 History
The dividend of AJG has a limited annual growth rate of 5.97%.
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)5.97%
Div Incr Years14
Div Non Decr Years34
5.3 Sustainability
43.74% of the earnings are spent on dividend by AJG. This is a bit on the high side, but may be sustainable.
The dividend of AJG is growing, but earnings are growing more, so the dividend growth is sustainable.
DP43.74%
EPS Next 2Y14.81%
EPS Next 3Y14.18%
ARTHUR J GALLAGHER & CO
NYSE:AJG (1/22/2025, 10:28:01 AM)
295.78
-0.99 (-0.33%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners88.61%
Inst Owner Change0.35%
Ins Owners0.73%
Ins Owner Change2.45%
Market Cap73.89B
Analysts73.64
Price Target304.55 (2.97%)
Short Float %3.79%
Short Ratio4.72
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.81% |
Yearly Dividend2.21
Dividend Growth(5Y)5.97%
DP43.74%
Div Incr Years14
Div Non Decr Years34
Ex-DateN/A
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-0.78%
Min EPS beat(2)-1.48%
Max EPS beat(2)-0.08%
EPS beat(4)1
Avg EPS beat(4)-0.28%
Min EPS beat(4)-1.48%
Max EPS beat(4)1.34%
EPS beat(8)4
Avg EPS beat(8)-1.53%
EPS beat(12)8
Avg EPS beat(12)-0.42%
EPS beat(16)12
Avg EPS beat(16)1.57%
Revenue beat(2)0
Avg Revenue beat(2)-2.1%
Min Revenue beat(2)-2.19%
Max Revenue beat(2)-2.02%
Revenue beat(4)0
Avg Revenue beat(4)-1.7%
Min Revenue beat(4)-2.19%
Max Revenue beat(4)-0.67%
Revenue beat(8)2
Avg Revenue beat(8)-0.28%
Revenue beat(12)5
Avg Revenue beat(12)0.59%
Revenue beat(16)9
Avg Revenue beat(16)5.32%
PT rev (1m)0.84%
PT rev (3m)3.16%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-0.08%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.86%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.22%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.17%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30 | ||
| Fwd PE | 25.56 | ||
| P/S | 6.56 | ||
| P/FCF | 30.88 | ||
| P/OCF | 29.12 | ||
| P/B | 6.06 | ||
| P/tB | N/A | ||
| EV/EBITDA | 26.53 |
EPS(TTM)9.86
EY3.33%
EPS(NY)11.57
Fwd EY3.91%
FCF(TTM)9.58
FCFY3.24%
OCF(TTM)10.16
OCFY3.43%
SpS45.12
BVpS48.78
TBVpS-17.46
PEG (NY)1.86
PEG (5Y)1.46
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.05% | ||
| ROE | 9.62% | ||
| ROCE | 9.98% | ||
| ROIC | 8.17% | ||
| ROICexc | 8.98% | ||
| ROICexgc | 48.78% | ||
| OM | 19.52% | ||
| PM (TTM) | 10.4% | ||
| GM | 45.1% | ||
| FCFM | 21.23% |
ROA(3y)2.5%
ROA(5y)2.92%
ROE(3y)10.61%
ROE(5y)11.61%
ROIC(3y)7.65%
ROIC(5y)7.37%
ROICexc(3y)7.95%
ROICexc(5y)7.71%
ROICexgc(3y)37.35%
ROICexgc(5y)34.13%
ROCE(3y)9.36%
ROCE(5y)9.03%
ROICexcg growth 3Y9.62%
ROICexcg growth 5Y6.72%
ROICexc growth 3Y-3.03%
ROICexc growth 5Y3.71%
OM growth 3Y2.39%
OM growth 5Y14.92%
PM growth 3Y-6.27%
PM growth 5Y1.05%
GM growth 3Y6.87%
GM growth 5Y9.78%
F-Score6
Asset Turnover0.2
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.66 | ||
| Debt/FCF | 3.45 | ||
| Debt/EBITDA | 2.67 | ||
| Cap/Depr | 17.62% | ||
| Cap/Sales | 1.28% | ||
| Interest Coverage | 6.31 | ||
| Cash Conversion | 84.05% | ||
| Profit Quality | 204.14% | ||
| Current Ratio | 1.06 | ||
| Quick Ratio | 1.06 | ||
| Altman-Z | 1.47 |
F-Score6
WACC8.72%
ROIC/WACC0.94
Cap/Depr(3y)26.99%
Cap/Depr(5y)25.58%
Cap/Sales(3y)1.88%
Cap/Sales(5y)1.79%
Profit Quality(3y)179.23%
Profit Quality(5y)178.57%
High Growth Momentum
Growth
EPS 1Y (TTM)19.81%
EPS 3Y22.9%
EPS 5Y20.54%
EPS Q2Q%13%
EPS Next Y16.09%
EPS Next 2Y14.81%
EPS Next 3Y14.18%
EPS Next 5Y14.82%
Revenue 1Y (TTM)16.57%
Revenue growth 3Y12.87%
Revenue growth 5Y7.75%
Sales Q2Q%11.86%
Revenue Next Year14.71%
Revenue Next 2Y16.56%
Revenue Next 3Y14.71%
Revenue Next 5Y11.1%
EBIT growth 1Y7.75%
EBIT growth 3Y15.57%
EBIT growth 5Y23.83%
EBIT Next Year27.55%
EBIT Next 3Y21.91%
EBIT Next 5Y17.55%
FCF growth 1Y6.2%
FCF growth 3Y2.48%
FCF growth 5Y23.46%
OCF growth 1Y4.89%
OCF growth 3Y3.98%
OCF growth 5Y21.57%