ARTHUR J GALLAGHER & CO (AJG) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:AJG - US3635761097 - Common Stock
242.37 USD
+0.04 (+0.02%)
242.37 USD
0 (0%)
Taking everything into account, AJG scores 5 out of 10 in our fundamental rating. AJG was compared to 148 industry peers in the Insurance industry. AJG scores excellent on profitability, but there are concerns on its financial health. AJG is valued quite expensive, but it does show an excellent growth.
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.
- AJG had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- AJG has a Return On Assets of 2.03%. This is comparable to the rest of the industry: AJG outperforms 53.38% of its industry peers.
- AJG has a worse Return On Equity (6.90%) than 69.59% of its industry peers.
- AJG has a Return On Invested Capital of 6.70%. This is amongst the best in the industry. AJG outperforms 86.49% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for AJG is significantly below the industry average of 14.94%.
| 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's Profit Margin of 12.29% is fine compared to the rest of the industry. AJG outperforms 66.22% of its industry peers.
- In the last couple of years the Profit Margin of AJG has grown nicely.
- AJG has a Operating Margin of 24.80%. This is amongst the best in the industry. AJG outperforms 83.11% of its industry peers.
- In the last couple of years the Operating Margin of AJG has grown nicely.
- Looking at the Gross Margin, with a value of 46.39%, AJG belongs to the top of the industry, outperforming 93.24% of the companies in the same industry.
- 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
- 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.
- 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 1.11, we must say that AJG is in the distress zone and has some risk of bankruptcy.
- Looking at the Altman-Z score, with a value of 1.11, AJG belongs to the top of the industry, outperforming 80.41% 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 Debt to FCF ratio of 7.42. This is in the lower half of the industry: AJG underperforms 67.57% 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 74.32% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 7.42 | ||
| Altman-Z | 1.11 |
ROIC/WACC0.84
WACC7.97%
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 79.73% 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.
- The Quick ratio of AJG (1.06) is better than 79.73% 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
- AJG shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 15.61%.
- 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.
- AJG is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 13.90% yearly.
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
- 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 23.19, AJG is valued on the expensive side.
- Based on the Price/Earnings ratio, AJG is valued a bit more expensive than the industry average as 72.97% of the companies are valued more cheaply.
- AJG is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.60, which is the current average of the S&P500 Index.
- Based on the Price/Forward Earnings ratio of 18.08, the valuation of AJG can be described as rather expensive.
- AJG's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. AJG is more expensive than 68.24% of the companies in the same industry.
- AJG is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 25.83, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.19 | ||
| Fwd PE | 18.08 |
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 65.54% of the companies listed in the same industry.
- AJG's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. AJG is more expensive than 70.95% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 35.22 | ||
| EV/EBITDA | 17.53 |
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 a very decent profitability rating, which 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)3.59
PEG (5Y)1.03
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 2.41, AJG has a dividend in line with its industry peers.
- Compared to an average S&P500 Dividend Yield of 1.82, 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 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
- 39.43% 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.
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%.