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 shows excellent growth, but is valued quite expensive already.
1. Profitability
1.1 Basic Checks
- AJG had positive earnings in the past year.
- AJG had a positive operating cash flow in the past year.
- AJG had positive earnings in each of the past 5 years.
- In the past 5 years AJG always reported a positive cash flow from operatings.
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.
- With an excellent Return On Invested Capital value of 6.70%, AJG belongs to the best of the industry, outperforming 86.58% of the companies in the same industry.
- AJG had an Average Return On Invested Capital over the past 3 years of 7.35%. This is significantly below the industry average of 14.92%.
| 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
- The Profit Margin of AJG (12.29%) is better than 66.44% of its industry peers.
- 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.
- AJG's Operating Margin has improved in the last couple of years.
- The Gross Margin of AJG (46.39%) is better 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
- 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.
- AJG has a worse debt/assets ratio than last year.
2.2 Solvency
- AJG has an Altman-Z score of 1.13. This is a bad value and indicates that AJG is not financially healthy and even has some risk of bankruptcy.
- Looking at the Altman-Z score, with a value of 1.13, AJG is in the better half of the industry, outperforming 79.87% of the companies in the same industry.
- 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.
- With a Debt to FCF ratio value of 7.42, AJG is not doing good in the industry: 67.79% of the companies in the same industry are doing better.
- A Debt/Equity ratio of 0.53 indicates that AJG is somewhat dependend on debt financing.
- With a Debt to Equity ratio value of 0.53, AJG is not doing good in the industry: 73.83% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 7.42 | ||
| Altman-Z | 1.13 |
ROIC/WACC0.84
WACC8.02%
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.
- The Quick ratio of AJG (1.06) is better than 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%.
- AJG shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 22.61% yearly.
- AJG shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 15.61%.
- 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)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
- AJG is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 16.30% yearly.
- 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 Y7.15%
EPS Next 2Y15.43%
EPS Next 3Y14.68%
EPS Next 5Y16.3%
Revenue Next Year21.22%
Revenue Next 2Y21.91%
Revenue Next 3Y17.75%
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.
- 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.
- When comparing the Price/Earnings ratio of AJG to the average of the S&P500 Index (27.21), we can say AJG is valued inline with the index average.
- The Price/Forward Earnings ratio is 18.74, which indicates a rather expensive current valuation of AJG.
- Based on the Price/Forward Earnings ratio, AJG is valued a bit more expensive than the industry average as 69.80% of the companies are valued more cheaply.
- AJG is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 24.26, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.23 | ||
| Fwd PE | 18.74 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, AJG is valued a bit more expensive than 67.11% of the companies 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 71.14% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 36.79 | ||
| EV/EBITDA | 18.02 |
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.
- 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 14.68% in the coming years.
PEG (NY)3.39
PEG (5Y)1.07
EPS Next 2Y15.43%
EPS Next 3Y14.68%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 1.02%, AJG has a reasonable but not impressive dividend return.
- AJG's Dividend Yield is comparable with the industry average which is at 2.53.
- With a Dividend Yield of 1.02, AJG pays less dividend than the S&P500 average, which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.02% |
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
- 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 2Y15.43%
EPS Next 3Y14.68%
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%.