ARTHUR J GALLAGHER & CO (AJG) Stock Fundamental Analysis
USA - NYSE:AJG - US3635761097 - Common Stock
297.28 USD
-3.33 (-1.11%)
297.28 USD
0 (0%)
We assign a fundamental rating of 5 out of 10 to AJG. AJG was compared to 146 industry peers in the Insurance industry. While AJG has a great profitability rating, there are quite some 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.
Each year in the past 5 years AJG has been profitable.
In the past 5 years AJG always reported a positive cash flow from operatings.
1.2 Ratios
AJG has a Return On Assets (2.05%) which is comparable to the rest of the industry.
AJG's Return On Equity of 7.13% is on the low side compared to the rest of the industry. AJG is outperformed by 65.75% of its industry peers.
The Return On Invested Capital of AJG (6.72%) is better than 88.36% of its industry peers.
AJG had an Average Return On Invested Capital over the past 3 years of 7.35%. This is above the industry average of 4.47%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.05% | ||
| ROE | 7.13% | ||
| ROIC | 6.72% |
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
With a decent Profit Margin value of 13.16%, AJG is doing good in the industry, outperforming 76.03% of the companies in the same industry.
In the last couple of years the Profit Margin of AJG has grown nicely.
AJG has a better Operating Margin (25.44%) than 91.78% of its industry peers.
AJG's Operating Margin has improved in the last couple of years.
The Gross Margin of AJG (46.51%) is better than 93.84% of its industry peers.
AJG's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 25.44% | ||
| PM (TTM) | 13.16% | ||
| GM | 46.51% |
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.
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.
AJG has a worse debt/assets ratio than last year.
2.2 Solvency
AJG has an Altman-Z score of 1.42. This is a bad value and indicates that AJG is not financially healthy and even has some risk of bankruptcy.
The Altman-Z score of AJG (1.42) is better than 82.19% of its industry peers.
The Debt to FCF ratio of AJG is 6.54, which is on the high side as it means it would take AJG, 6.54 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of AJG (6.54) is worse than 64.38% 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 has a worse Debt to Equity ratio (0.53) than 70.55% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 6.54 | ||
| Altman-Z | 1.42 |
ROIC/WACC0.84
WACC7.96%
2.3 Liquidity
AJG has a Current Ratio of 1.36. This is a normal value and indicates that AJG is financially healthy and should not expect problems in meeting its short term obligations.
With an excellent Current ratio value of 1.36, AJG belongs to the best of the industry, outperforming 84.25% of the companies in the same industry.
A Quick Ratio of 1.36 indicates that AJG should not have too much problems paying its short term obligations.
AJG has a better Quick ratio (1.36) than 84.25% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.36 | ||
| Quick Ratio | 1.36 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 8.23% over the past year.
The Earnings Per Share has been growing by 22.61% on average over the past years. This is a very strong growth
Looking at the last year, AJG shows a quite strong growth in Revenue. The Revenue has grown by 13.83% in the last year.
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)8.23%
EPS 3Y22.62%
EPS 5Y22.61%
EPS Q2Q%3.1%
Revenue 1Y (TTM)13.83%
Revenue growth 3Y12.07%
Revenue growth 5Y9.94%
Sales Q2Q%17.86%
3.2 Future
The Earnings Per Share is expected to grow by 15.95% 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 13.92% yearly.
EPS Next Y10.02%
EPS Next 2Y16.33%
EPS Next 3Y14.77%
EPS Next 5Y15.95%
Revenue Next Year21.43%
Revenue Next 2Y22.07%
Revenue Next 3Y17.6%
Revenue Next 5Y13.92%
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
The Price/Earnings ratio is 28.61, which means the current valuation is very expensive for AJG.
Based on the Price/Earnings ratio, AJG is valued a bit more expensive than the industry average as 78.08% of the companies are valued more cheaply.
Compared to an average S&P500 Price/Earnings ratio of 27.30, AJG is valued at the same level.
A Price/Forward Earnings ratio of 21.66 indicates a rather expensive valuation of AJG.
Compared to the rest of the industry, the Price/Forward Earnings ratio of AJG indicates a slightly more expensive valuation: AJG is more expensive than 73.29% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.73, AJG is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.61 | ||
| Fwd PE | 21.66 |
4.2 Price Multiples
AJG's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. AJG is more expensive than 62.33% of the companies in the same industry.
69.86% of the companies in the same industry are cheaper than AJG, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 38.65 | ||
| EV/EBITDA | 18.3 |
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.
AJG's earnings are expected to grow with 14.77% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.86
PEG (5Y)1.27
EPS Next 2Y16.33%
EPS Next 3Y14.77%
5. Dividend
5.1 Amount
With a yearly dividend of 0.86%, AJG is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 3.53, AJG has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.41, AJG's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.86% |
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
36.32% 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.
DP36.32%
EPS Next 2Y16.33%
EPS Next 3Y14.77%
297.28
-3.33 (-1.11%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners91.37%
Inst Owner Change-1.47%
Ins Owners0.59%
Ins Owner Change5.51%
Market Cap76.21B
Analysts75.65
Price Target346.64 (16.6%)
Short Float %1.46%
Short Ratio2.4
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.86% |
Yearly Dividend2.25
Dividend Growth(5Y)5.46%
DP36.32%
Div Incr Years14
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-0.57%
Min EPS beat(2)-2.57%
Max EPS beat(2)1.43%
EPS beat(4)2
Avg EPS beat(4)0.27%
Min EPS beat(4)-2.57%
Max EPS beat(4)3.69%
EPS beat(8)4
Avg EPS beat(8)0.38%
EPS beat(12)7
Avg EPS beat(12)-0.62%
EPS beat(16)11
Avg EPS beat(16)0.38%
Revenue beat(2)0
Avg Revenue beat(2)-0.86%
Min Revenue beat(2)-0.9%
Max Revenue beat(2)-0.81%
Revenue beat(4)0
Avg Revenue beat(4)-1.44%
Min Revenue beat(4)-2.19%
Max Revenue beat(4)-0.81%
Revenue beat(8)0
Avg Revenue beat(8)-1.32%
Revenue beat(12)2
Avg Revenue beat(12)-0.52%
Revenue beat(16)6
Avg Revenue beat(16)1.13%
PT rev (1m)0.49%
PT rev (3m)-1.58%
EPS NQ rev (1m)0.96%
EPS NQ rev (3m)2.38%
EPS NY rev (1m)0.07%
EPS NY rev (3m)-0.4%
Revenue NQ rev (1m)0.64%
Revenue NQ rev (3m)1.38%
Revenue NY rev (1m)-0.12%
Revenue NY rev (3m)-0.67%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 28.61 | ||
| Fwd PE | 21.66 | ||
| P/S | 6.11 | ||
| P/FCF | 38.65 | ||
| P/OCF | 35.95 | ||
| P/B | 3.31 | ||
| P/tB | 18.36 | ||
| EV/EBITDA | 18.3 |
EPS(TTM)10.39
EY3.5%
EPS(NY)13.72
Fwd EY4.62%
FCF(TTM)7.69
FCFY2.59%
OCF(TTM)8.27
OCFY2.78%
SpS48.65
BVpS89.81
TBVpS16.19
PEG (NY)2.86
PEG (5Y)1.27
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.05% | ||
| ROE | 7.13% | ||
| ROCE | 8.44% | ||
| ROIC | 6.72% | ||
| ROICexc | 10.82% | ||
| ROICexgc | 55.53% | ||
| OM | 25.44% | ||
| PM (TTM) | 13.16% | ||
| GM | 46.51% | ||
| FCFM | 15.81% |
ROA(3y)2.35%
ROA(5y)2.69%
ROE(3y)9.48%
ROE(5y)10.47%
ROIC(3y)7.35%
ROIC(5y)7.18%
ROICexc(3y)9.13%
ROICexc(5y)8.37%
ROICexgc(3y)48.09%
ROICexgc(5y)40.27%
ROCE(3y)9.3%
ROCE(5y)9.1%
ROICexcg growth 3Y31.7%
ROICexcg growth 5Y18.43%
ROICexc growth 3Y18.63%
ROICexc growth 5Y11.64%
OM growth 3Y13.45%
OM growth 5Y16.28%
PM growth 3Y4.65%
PM growth 5Y6.37%
GM growth 3Y6.97%
GM growth 5Y6.66%
F-Score6
Asset Turnover0.16
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 6.54 | ||
| Debt/EBITDA | 3 | ||
| Cap/Depr | 16.31% | ||
| Cap/Sales | 1.19% | ||
| Interest Coverage | 7.87 | ||
| Cash Conversion | 51.96% | ||
| Profit Quality | 120.15% | ||
| Current Ratio | 1.36 | ||
| Quick Ratio | 1.36 | ||
| Altman-Z | 1.42 |
F-Score6
WACC7.96%
ROIC/WACC0.84
Cap/Depr(3y)25.04%
Cap/Depr(5y)23.1%
Cap/Sales(3y)1.76%
Cap/Sales(5y)1.65%
Profit Quality(3y)176.95%
Profit Quality(5y)182.63%
High Growth Momentum
Growth
EPS 1Y (TTM)8.23%
EPS 3Y22.62%
EPS 5Y22.61%
EPS Q2Q%3.1%
EPS Next Y10.02%
EPS Next 2Y16.33%
EPS Next 3Y14.77%
EPS Next 5Y15.95%
Revenue 1Y (TTM)13.83%
Revenue growth 3Y12.07%
Revenue growth 5Y9.94%
Sales Q2Q%17.86%
Revenue Next Year21.43%
Revenue Next 2Y22.07%
Revenue Next 3Y17.6%
Revenue Next 5Y13.92%
EBIT growth 1Y51.53%
EBIT growth 3Y27.14%
EBIT growth 5Y27.83%
EBIT Next Year66.7%
EBIT Next 3Y30.57%
EBIT Next 5Y20.35%
FCF growth 1Y21.9%
FCF growth 3Y15.71%
FCF growth 5Y20.01%
OCF growth 1Y17.9%
OCF growth 3Y14.87%
OCF growth 5Y18.21%