ARTHUR J GALLAGHER & CO (AJG)
US3635761097 - Common Stock
We assign a fundamental rating of 6 out of 10 to AJG. AJG was compared to 141 industry peers in the Insurance industry. AJG has an excellent profitability rating, but there are some minor concerns on its financial health. AJG is valued quite expensively, but it does show have an excellent growth rating.
1. Profitability
1.1 Basic Checks
In the past year AJG was profitable.
In the past year AJG had a positive cash flow from operations.
Each year in the past 5 years AJG has been profitable.
Each year in the past 5 years AJG had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of 1.81%, AJG is in line with its industry, outperforming 51.80% of the companies in the same industry.
AJG has a Return On Equity (9.85%) which is in line with its industry peers.
AJG's Return On Invested Capital of 8.02% is amongst the best of the industry. AJG outperforms 92.81% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AJG is above the industry average of 4.02%.
The 3 year average ROIC (7.65%) for AJG is below the current ROIC(8.02%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.81% | ||
| ROE | 9.85% | ||
| ROIC | 8.02% |
ROA(3y)2.5%
ROA(5y)2.92%
ROE(3y)10.61%
ROE(5y)11.61%
ROIC(3y)7.65%
ROIC(5y)7.37%
1.3 Margins
Looking at the Profit Margin, with a value of 10.41%, AJG is in the better half of the industry, outperforming 66.19% of the companies in the same industry.
AJG's Profit Margin has been stable in the last couple of years.
AJG's Operating Margin of 19.11% is fine compared to the rest of the industry. AJG outperforms 76.98% of its industry peers.
In the last couple of years the Operating Margin of AJG has grown nicely.
The Gross Margin of AJG (44.85%) is better than 94.24% of its industry peers.
In the last couple of years the Gross Margin of AJG has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 19.11% | ||
| PM (TTM) | 10.41% | ||
| GM | 44.85% |
OM growth 3Y2.39%
OM growth 5Y14.92%
PM growth 3Y-6.27%
PM growth 5Y1.05%
GM growth 3Y6.87%
GM growth 5Y9.78%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), 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.
Compared to 1 year ago, AJG has an improved debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 1.16, we must say that AJG is in the distress zone and has some risk of bankruptcy.
AJG's Altman-Z score of 1.16 is amongst the best of the industry. AJG outperforms 83.45% of its industry peers.
AJG has a debt to FCF ratio of 3.55. This is a good value and a sign of high solvency as AJG would need 3.55 years to pay back of all of its debts.
With a Debt to FCF ratio value of 3.55, AJG is not doing good in the industry: 60.43% of the companies in the same industry are doing better.
AJG has a Debt/Equity ratio of 0.69. This is a neutral value indicating AJG is somewhat dependend on debt financing.
The Debt to Equity ratio of AJG (0.69) is worse than 75.54% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.69 | ||
| Debt/FCF | 3.55 | ||
| Altman-Z | 1.16 |
ROIC/WACC0.98
WACC8.16%
2.3 Liquidity
AJG has a Current Ratio of 1.04. 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 1.04 is fine compared to the rest of the industry. AJG outperforms 78.42% of its industry peers.
AJG has a Quick Ratio of 1.04. 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 1.04 is fine compared to the rest of the industry. AJG outperforms 78.42% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.04 | ||
| Quick Ratio | 1.04 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 20.75% over the past year.
AJG shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 20.54% yearly.
Looking at the last year, AJG shows a quite strong growth in Revenue. The Revenue has grown by 18.82% in the last year.
AJG shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 7.75% yearly.
EPS 1Y (TTM)20.75%
EPS 3Y22.9%
EPS 5Y20.54%
EPS Q2Q%18.95%
Revenue 1Y (TTM)18.82%
Revenue growth 3Y12.87%
Revenue growth 5Y7.75%
Sales Q2Q%13.78%
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 12.87% yearly.
Based on estimates for the next years, AJG will show a quite strong growth in Revenue. The Revenue will grow by 11.06% on average per year.
EPS Next Y17.1%
EPS Next 2Y14.52%
EPS Next 3Y12.95%
EPS Next 5Y12.87%
Revenue Next Year14.91%
Revenue Next 2Y12.59%
Revenue Next 3Y11.06%
Revenue Next 5YN/A
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
With a Price/Earnings ratio of 29.94, AJG can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of AJG indicates a slightly more expensive valuation: AJG is more expensive than 72.66% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 31.52, AJG is valued at the same level.
With a Price/Forward Earnings ratio of 24.96, AJG is valued on the expensive side.
Based on the Price/Forward Earnings ratio, AJG is valued a bit more expensive than 74.10% of the companies in the same industry.
AJG is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 22.55, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.94 | ||
| Fwd PE | 24.96 |
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 61.87% of the companies in the same industry.
71.94% 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 | 26.99 | ||
| EV/EBITDA | 24.26 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
The excellent profitability rating of AJG may justify a higher PE ratio.
AJG's earnings are expected to grow with 12.95% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.75
PEG (5Y)1.46
EPS Next 2Y14.52%
EPS Next 3Y12.95%
5. Dividend
5.1 Amount
AJG has a yearly dividend return of 0.84%, which is pretty low.
AJG's Dividend Yield is slightly below the industry average, which is at 5.31.
With a Dividend Yield of 0.84, AJG pays less dividend than the S&P500 average, which is at 2.22.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.84% |
5.2 History
The dividend of AJG has a limited annual growth rate of 5.97%.
AJG has paid a dividend for at least 10 years, which is a reliable track record.
AJG has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)5.97%
Div Incr Years13
Div Non Decr Years33
5.3 Sustainability
AJG pays out 43.82% of its income as dividend. This is a bit on the high side, but may be sustainable.
The dividend of AJG is growing, but earnings are growing more, so the dividend growth is sustainable.
DP43.82%
EPS Next 2Y14.52%
EPS Next 3Y12.95%
ARTHUR J GALLAGHER & CO
NYSE:AJG (10/14/2024, 9:43:46 AM)
287.4
-0.51 (-0.18%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap62.97B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.84% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
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EPS beat(8)
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EPS beat(12)
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EPS beat(16)
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Revenue beat(2)
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Revenue beat(8)
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Revenue beat(12)
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Revenue beat(16)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.94 | ||
| Fwd PE | 24.96 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)1.75
PEG (5Y)1.46
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.81% | ||
| ROE | 9.85% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 19.11% | ||
| PM (TTM) | 10.41% | ||
| GM | 44.85% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.17
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.69 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.04 | ||
| Quick Ratio | 1.04 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)20.75%
EPS 3Y22.9%
EPS 5Y
EPS Q2Q%
EPS Next Y17.1%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)18.82%
Revenue growth 3Y12.87%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y