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%)
AJG gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 148 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 shows excellent growth, but is valued quite expensive already.
1. Profitability
1.1 Basic Checks
- In the past year AJG was profitable.
- AJG had a positive operating cash flow in the past year.
- Each year in the past 5 years AJG has 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 2.03%, AJG perfoms like the industry average, outperforming 53.02% of the companies in the same industry.
- With a Return On Equity value of 6.90%, AJG is not doing good in the industry: 69.80% of the companies in the same industry are doing better.
- The Return On Invested Capital of AJG (6.70%) is better than 86.58% of its industry peers.
- AJG had an Average Return On Invested Capital over the past 3 years of 7.35%. This is significantly below the industry average of 14.93%.
| 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
- Looking at the Profit Margin, with a value of 12.29%, AJG is in the better half of the industry, outperforming 66.44% of the companies in the same industry.
- AJG's Profit Margin has improved in the last couple of years.
- The Operating Margin of AJG (24.80%) is better than 83.22% of its industry peers.
- In the last couple of years the Operating Margin of AJG has grown nicely.
- AJG has a better Gross Margin (46.39%) than 93.29% of its industry peers.
- In the last couple of years the Gross Margin of AJG has grown nicely.
| 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
- 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 1.14. This is a bad value and indicates that AJG is not financially healthy and even has some risk of bankruptcy.
- With a decent Altman-Z score value of 1.14, AJG is doing good in the industry, outperforming 79.87% of the companies in the same industry.
- AJG has a debt to FCF ratio of 7.42. This is a slightly negative value and a sign of low solvency as AJG would need 7.42 years to pay back of all of its debts.
- AJG has a worse Debt to FCF ratio (7.42) than 67.79% of its industry peers.
- A Debt/Equity ratio of 0.53 indicates that AJG is somewhat dependend on debt financing.
- The Debt to Equity ratio of AJG (0.53) is worse than 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.
- AJG's Current ratio of 1.06 is fine compared to the rest of the industry. AJG outperforms 79.19% of its industry peers.
- AJG has a Quick 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.
- AJG's Quick ratio of 1.06 is fine compared to the rest of the industry. AJG outperforms 79.19% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.06 | ||
| Quick Ratio | 1.06 |
3. Growth
3.1 Past
- AJG shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 5.98%.
- The Earnings Per Share has been growing by 22.61% on average over the past years. This is a very strong growth
- The Revenue has grown by 15.61% in the past year. This is quite good.
- 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)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
- The Earnings Per Share is expected to grow by 16.30% on average over the next years. This is quite good.
- The Revenue is expected to grow by 13.90% on average over the next years. This is quite good.
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.
- 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
- The Price/Earnings ratio is 24.23, which indicates a rather expensive current valuation of AJG.
- 73.15% of the companies in the same industry are cheaper than AJG, based on the Price/Earnings ratio.
- AJG's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.21.
- A Price/Forward Earnings ratio of 18.89 indicates a rather expensive valuation of AJG.
- Based on the Price/Forward Earnings ratio, AJG is valued a bit more expensive than the industry average as 70.47% of the companies are valued more cheaply.
- AJG's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.98.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.23 | ||
| Fwd PE | 18.89 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, AJG is valued a bit more expensive than the industry average as 67.11% 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 71.81% of the companies are valued more cheaply.
| 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 AJG does not grow enough to justify the current Price/Earnings ratio.
- The decent profitability rating of AJG may justify a higher PE ratio.
- AJG's earnings are expected to grow with 14.10% in the coming years. This may justify a more expensive valuation.
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%. Purely for dividend investing, there may be better candidates out there.
- AJG's Dividend Yield is comparable with the industry average which is at 2.41.
- 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 been paying a dividend for at least 10 years, so it has 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
- AJG pays out 39.43% of its income as dividend. This is a sustainable payout ratio.
- The dividend of AJG is growing, but earnings are growing more, so the dividend growth is 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%.