ARTHUR J GALLAGHER & CO (AJG) Stock Fundamental Analysis
NYSE:AJG - New York Stock Exchange, Inc. - US3635761097 - Common Stock - Currency: USD
Overall AJG gets a fundamental rating of 5 out of 10. We evaluated AJG against 143 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.
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
AJG has a Return On Assets (2.10%) which is comparable to the rest of the industry.
With a Return On Equity value of 6.98%, AJG is not doing good in the industry: 67.83% of the companies in the same industry are doing better.
AJG has a better Return On Invested Capital (6.31%) than 88.11% 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 4.27%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.1% | ||
| ROE | 6.98% | ||
| ROIC | 6.31% |
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 has a better Profit Margin (12.96%) than 76.22% of its industry peers.
AJG's Profit Margin has improved in the last couple of years.
AJG has a Operating Margin of 24.43%. This is amongst the best in the industry. AJG outperforms 88.11% 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 45.97%, AJG belongs to the top of the industry, outperforming 93.71% 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 | 24.43% | ||
| PM (TTM) | 12.96% | ||
| GM | 45.97% |
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
AJG has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, AJG has more shares outstanding
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
AJG has an Altman-Z score of 1.67. This is a bad value and indicates that AJG is not financially healthy and even has some risk of bankruptcy.
AJG's Altman-Z score of 1.67 is amongst the best of the industry. AJG outperforms 88.81% of its industry peers.
The Debt to FCF ratio of AJG is 5.18, which is a neutral value as it means it would take AJG, 5.18 years of fcf income to pay off all of its debts.
AJG has a worse Debt to FCF ratio (5.18) than 67.83% of its industry peers.
AJG has a Debt/Equity ratio of 0.56. This is a neutral value indicating AJG is somewhat dependend on debt financing.
The Debt to Equity ratio of AJG (0.56) is worse than 73.43% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.56 | ||
| Debt/FCF | 5.18 | ||
| Altman-Z | 1.67 |
ROIC/WACC0.75
WACC8.4%
2.3 Liquidity
A Current Ratio of 1.44 indicates that AJG should not have too much problems paying its short term obligations.
AJG has a better Current ratio (1.44) than 87.41% of its industry peers.
A Quick Ratio of 1.44 indicates that AJG should not have too much problems paying its short term obligations.
AJG has a better Quick ratio (1.44) than 87.41% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.44 | ||
| Quick Ratio | 1.44 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 11.69% over the past year.
Measured over the past years, AJG shows a very strong growth in Earnings Per Share. The EPS has been growing by 22.61% on average per year.
AJG shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 13.21%.
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)11.69%
EPS 3Y22.62%
EPS 5Y22.61%
EPS Q2Q%5.16%
Revenue 1Y (TTM)13.21%
Revenue growth 3Y12.07%
Revenue growth 5Y9.94%
Sales Q2Q%15.35%
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 12.93% yearly.
EPS Next Y10.46%
EPS Next 2Y16.38%
EPS Next 3Y14.75%
EPS Next 5Y15.95%
Revenue Next Year20.67%
Revenue Next 2Y20.38%
Revenue Next 3Y17.07%
Revenue Next 5Y12.93%
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
Based on the Price/Earnings ratio of 32.98, the valuation of AJG can be described as expensive.
78.32% of the companies in the same industry are cheaper than AJG, based on the Price/Earnings ratio.
The average S&P500 Price/Earnings ratio is at 26.60. AJG is valued slightly more expensive when compared to this.
AJG is valuated rather expensively with a Price/Forward Earnings ratio of 24.78.
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 75.52% of the companies listed in the same industry.
AJG's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 22.43.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.98 | ||
| Fwd PE | 24.78 |
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 64.34% 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 75.52% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 34.47 | ||
| EV/EBITDA | 21.76 |
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.
The decent profitability rating of AJG 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)3.15
PEG (5Y)1.46
EPS Next 2Y16.38%
EPS Next 3Y14.75%
5. Dividend
5.1 Amount
With a yearly dividend of 0.77%, AJG is not a good candidate for dividend investing.
AJG's Dividend Yield is slightly below the industry average, which is at 3.17.
Compared to an average S&P500 Dividend Yield of 2.36, AJG's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.77% |
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
35.97% 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.
DP35.97%
EPS Next 2Y16.38%
EPS Next 3Y14.75%
340.33
-3.49 (-1.02%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners94.36%
Inst Owner Change-0.63%
Ins Owners0.66%
Ins Owner Change2.94%
Market Cap87.03B
Analysts74.78
Price Target347.53 (2.12%)
Short Float %1.19%
Short Ratio1.87
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.77% |
Yearly Dividend2.25
Dividend Growth(5Y)5.46%
DP35.97%
Div Incr Years14
Div Non Decr Years34
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)2.56%
Min EPS beat(2)1.43%
Max EPS beat(2)3.69%
EPS beat(4)2
Avg EPS beat(4)0.89%
Min EPS beat(4)-1.48%
Max EPS beat(4)3.69%
EPS beat(8)5
Avg EPS beat(8)0.83%
EPS beat(12)8
Avg EPS beat(12)-0.39%
EPS beat(16)12
Avg EPS beat(16)0.64%
Revenue beat(2)0
Avg Revenue beat(2)-1.39%
Min Revenue beat(2)-1.87%
Max Revenue beat(2)-0.9%
Revenue beat(4)0
Avg Revenue beat(4)-1.74%
Min Revenue beat(4)-2.19%
Max Revenue beat(4)-0.9%
Revenue beat(8)1
Avg Revenue beat(8)-0.94%
Revenue beat(12)3
Avg Revenue beat(12)-0.43%
Revenue beat(16)7
Avg Revenue beat(16)2.56%
PT rev (1m)2.03%
PT rev (3m)10.42%
EPS NQ rev (1m)0.04%
EPS NQ rev (3m)-12.08%
EPS NY rev (1m)-1.01%
EPS NY rev (3m)-4.65%
Revenue NQ rev (1m)0.53%
Revenue NQ rev (3m)-15.35%
Revenue NY rev (1m)-3.42%
Revenue NY rev (3m)-5.79%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 32.98 | ||
| Fwd PE | 24.78 | ||
| P/S | 7.24 | ||
| P/FCF | 34.47 | ||
| P/OCF | 32.65 | ||
| P/B | 3.9 | ||
| P/tB | 17.16 | ||
| EV/EBITDA | 21.76 |
EPS(TTM)10.32
EY3.03%
EPS(NY)13.73
Fwd EY4.04%
FCF(TTM)9.87
FCFY2.9%
OCF(TTM)10.42
OCFY3.06%
SpS47.02
BVpS87.28
TBVpS19.84
PEG (NY)3.15
PEG (5Y)1.46
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.1% | ||
| ROE | 6.98% | ||
| ROCE | 7.93% | ||
| ROIC | 6.31% | ||
| ROICexc | 11.45% | ||
| ROICexgc | 71.77% | ||
| OM | 24.43% | ||
| PM (TTM) | 12.96% | ||
| GM | 45.97% | ||
| FCFM | 21% |
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 | 0.56 | ||
| Debt/FCF | 5.18 | ||
| Debt/EBITDA | 3.29 | ||
| Cap/Depr | 15.81% | ||
| Cap/Sales | 1.17% | ||
| Interest Coverage | 7 | ||
| Cash Conversion | 69.66% | ||
| Profit Quality | 161.99% | ||
| Current Ratio | 1.44 | ||
| Quick Ratio | 1.44 | ||
| Altman-Z | 1.67 |
F-Score6
WACC8.4%
ROIC/WACC0.75
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)11.69%
EPS 3Y22.62%
EPS 5Y22.61%
EPS Q2Q%5.16%
EPS Next Y10.46%
EPS Next 2Y16.38%
EPS Next 3Y14.75%
EPS Next 5Y15.95%
Revenue 1Y (TTM)13.21%
Revenue growth 3Y12.07%
Revenue growth 5Y9.94%
Sales Q2Q%15.35%
Revenue Next Year20.67%
Revenue Next 2Y20.38%
Revenue Next 3Y17.07%
Revenue Next 5Y12.93%
EBIT growth 1Y47.14%
EBIT growth 3Y27.14%
EBIT growth 5Y27.83%
EBIT Next Year69.85%
EBIT Next 3Y28.74%
EBIT Next 5Y20.35%
FCF growth 1Y16.76%
FCF growth 3Y15.71%
FCF growth 5Y20.01%
OCF growth 1Y14.04%
OCF growth 3Y14.87%
OCF growth 5Y18.21%