ARTHUR J GALLAGHER & CO (AJG) Stock Fundamental Analysis
USA - NYSE:AJG - US3635761097 - Common Stock
245.24 USD
-2.81 (-1.13%)
246.13 USD
+0.89 (+0.36%)
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 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.
In the past 5 years AJG always reported a positive cash flow from operatings.
1.2 Ratios
AJG has a Return On Assets of 2.05%. This is comparable to the rest of the industry: AJG outperforms 52.74% of its industry peers.
AJG has a Return On Equity of 7.13%. This is in the lower half of the industry: AJG underperforms 68.49% of its industry peers.
AJG has a better Return On Invested Capital (6.72%) than 87.67% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AJG is above the industry average of 4.53%.
| 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
The Profit Margin of AJG (13.16%) is better than 76.03% of its industry peers.
AJG's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 25.44%, AJG belongs to the top of the industry, outperforming 91.10% of the companies in the same industry.
In the last couple of years the Operating Margin of AJG has grown nicely.
AJG has a Gross Margin of 46.51%. This is amongst the best in the industry. AJG outperforms 93.84% of its industry peers.
In the last couple of years the Gross Margin of AJG has grown nicely.
| 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.
AJG has more shares outstanding than it did 1 year ago.
Compared to 5 years ago, AJG has more shares outstanding
The debt/assets ratio for AJG is higher compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 1.28, we must say that AJG is in the distress zone and has some risk of bankruptcy.
AJG's Altman-Z score of 1.28 is amongst the best of the industry. AJG outperforms 80.82% 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.
AJG has a worse Debt to FCF ratio (6.54) than 65.07% of its industry peers.
A Debt/Equity ratio of 0.53 indicates that AJG is somewhat dependend on debt financing.
AJG has a Debt to Equity ratio of 0.53. This is in the lower half of the industry: AJG underperforms 70.55% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 6.54 | ||
| Altman-Z | 1.28 |
ROIC/WACC0.85
WACC7.92%
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.
AJG has a Current ratio of 1.36. This is amongst the best in the industry. AJG outperforms 84.93% of its industry peers.
A Quick Ratio of 1.36 indicates that AJG should not have too much problems paying its short term obligations.
AJG has a Quick ratio of 1.36. This is amongst the best in the industry. AJG outperforms 84.93% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.36 | ||
| Quick Ratio | 1.36 |
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.
Looking at the last year, AJG shows a quite strong growth in Revenue. The Revenue has grown by 15.61% in the last year.
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.
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 Y8.99%
EPS Next 2Y16.08%
EPS Next 3Y14.75%
EPS Next 5Y16.3%
Revenue Next Year22.11%
Revenue Next 2Y22.43%
Revenue Next 3Y17.77%
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.
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
AJG is valuated rather expensively with a Price/Earnings ratio of 23.47.
73.97% of the companies in the same industry are cheaper than AJG, based on the Price/Earnings ratio.
Compared to an average S&P500 Price/Earnings ratio of 25.67, AJG is valued at the same level.
The Price/Forward Earnings ratio is 17.95, which indicates a rather expensive current valuation of AJG.
Based on the Price/Forward Earnings ratio, AJG is valued a bit more expensive than 69.18% of the companies in the same industry.
AJG's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 31.86.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.47 | ||
| Fwd PE | 17.95 |
4.2 Price Multiples
60.96% of the companies in the same industry are cheaper than AJG, based on the Enterprise Value to EBITDA ratio.
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 67.12% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 31.88 | ||
| EV/EBITDA | 15.2 |
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 14.75% in the coming years.
PEG (NY)2.61
PEG (5Y)1.04
EPS Next 2Y16.08%
EPS Next 3Y14.75%
5. Dividend
5.1 Amount
AJG has a Yearly Dividend Yield of 1.05%. Purely for dividend investing, there may be better candidates out there.
Compared to an average industry Dividend Yield of 3.25, AJG has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.40, AJG's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.05% |
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
AJG pays out 36.32% 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.
DP36.32%
EPS Next 2Y16.08%
EPS Next 3Y14.75%
245.24
-2.81 (-1.13%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners90.89%
Inst Owner Change-1.5%
Ins Owners0.6%
Ins Owner Change0.38%
Market Cap62.87B
Revenue(TTM)13.03B
Net Income(TTM)1.64B
Analysts75.83
Price Target347.85 (41.84%)
Short Float %1.5%
Short Ratio2.81
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 1.05% |
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)0.35%
PT rev (3m)-1.09%
EPS NQ rev (1m)0.54%
EPS NQ rev (3m)6%
EPS NY rev (1m)-0.08%
EPS NY rev (3m)0.83%
Revenue NQ rev (1m)1.96%
Revenue NQ rev (3m)6.6%
Revenue NY rev (1m)0.19%
Revenue NY rev (3m)1.02%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 23.47 | ||
| Fwd PE | 17.95 | ||
| P/S | 5.04 | ||
| P/FCF | 31.88 | ||
| P/OCF | 29.66 | ||
| P/B | 2.73 | ||
| P/tB | 15.14 | ||
| EV/EBITDA | 15.2 |
EPS(TTM)10.45
EY4.26%
EPS(NY)13.66
Fwd EY5.57%
FCF(TTM)7.69
FCFY3.14%
OCF(TTM)8.27
OCFY3.37%
SpS48.65
BVpS89.81
TBVpS16.19
PEG (NY)2.61
PEG (5Y)1.04
Graham Number145.31
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%
ROICexgc growth 3Y31.7%
ROICexgc 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 | 1.28 |
F-Score6
WACC7.92%
ROIC/WACC0.85
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)5.98%
EPS 3Y22.62%
EPS 5Y22.61%
EPS Q2Q%2.65%
EPS Next Y8.99%
EPS Next 2Y16.08%
EPS Next 3Y14.75%
EPS Next 5Y16.3%
Revenue 1Y (TTM)15.61%
Revenue growth 3Y12.07%
Revenue growth 5Y9.94%
Sales Q2Q%21.48%
Revenue Next Year22.11%
Revenue Next 2Y22.43%
Revenue Next 3Y17.77%
Revenue Next 5Y13.92%
EBIT growth 1Y51.53%
EBIT growth 3Y27.14%
EBIT growth 5Y27.83%
EBIT Next Year67.25%
EBIT Next 3Y31.74%
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%
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 for 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.
What is the earnings growth outlook for ARTHUR J GALLAGHER & CO?
The Earnings per Share (EPS) of ARTHUR J GALLAGHER & CO (AJG) is expected to grow by 8.99% in the next year.