ARTHUR J GALLAGHER & CO (AJG)
US3635761097 - Common Stock
We assign a fundamental rating of 5 out of 10 to AJG. AJG was compared to 141 industry peers in the Insurance industry. While AJG has a great profitability rating, 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.
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
The Return On Assets of AJG (1.79%) is comparable to the rest of the industry.
AJG has a Return On Equity of 9.66%. This is comparable to the rest of the industry: AJG outperforms 46.43% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.68%, AJG belongs to the top of the industry, outperforming 90.71% of the companies in the same industry.
AJG had an Average Return On Invested Capital over the past 3 years of 7.65%. This is above the industry average of 3.96%.
The last Return On Invested Capital (7.68%) for AJG is above the 3 year average (7.65%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.79% | ||
| ROE | 9.66% | ||
| ROIC | 7.68% |
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
AJG's Profit Margin of 10.27% is fine compared to the rest of the industry. AJG outperforms 63.57% of its industry peers.
AJG's Profit Margin has been stable in the last couple of years.
Looking at the Operating Margin, with a value of 18.80%, AJG is in the better half of the industry, outperforming 73.57% of the companies in the same industry.
AJG's Operating Margin has improved in the last couple of years.
The Gross Margin of AJG (44.98%) is better than 94.29% of its industry peers.
AJG's Gross Margin has improved in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 18.8% | ||
| PM (TTM) | 10.27% | ||
| GM | 44.98% |
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
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
AJG has more shares outstanding than it did 5 years ago.
AJG has a better debt/assets ratio than last year.
2.2 Solvency
AJG has an Altman-Z score of 1.15. 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 1.15 is amongst the best of the industry. AJG outperforms 82.14% of its industry peers.
The Debt to FCF ratio of AJG is 3.77, which is a good value as it means it would take AJG, 3.77 years of fcf income to pay off all of its debts.
AJG has a worse Debt to FCF ratio (3.77) than 60.71% of its industry peers.
A Debt/Equity ratio of 0.72 indicates that AJG is somewhat dependend on debt financing.
AJG has a Debt to Equity ratio of 0.72. This is in the lower half of the industry: AJG underperforms 73.57% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.72 | ||
| Debt/FCF | 3.77 | ||
| Altman-Z | 1.15 |
ROIC/WACC0.92
WACC8.33%
2.3 Liquidity
A Current Ratio of 1.05 indicates that AJG should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.05, AJG belongs to the top of the industry, outperforming 80.71% of the companies in the same industry.
AJG has a Quick Ratio of 1.05. 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 Quick ratio value of 1.05, AJG belongs to the best of the industry, outperforming 80.71% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.05 | ||
| Quick Ratio | 1.05 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 20.75% over the past year.
The Earnings Per Share has been growing by 20.54% on average over the past years. This is a very strong growth
The Revenue has grown by 17.79% in the past year. This is quite good.
Measured over the past years, AJG shows a small growth in Revenue. The Revenue has been growing by 7.75% on average per year.
EPS 1Y (TTM)20.75%
EPS 3Y22.9%
EPS 5Y20.54%
EPS Q2Q%18.95%
Revenue 1Y (TTM)17.79%
Revenue growth 3Y12.87%
Revenue growth 5Y7.75%
Sales Q2Q%13.91%
3.2 Future
Based on estimates for the next years, AJG will show a quite strong growth in Earnings Per Share. The EPS will grow by 12.87% on average per year.
The Revenue is expected to grow by 11.08% on average over the next years. This is quite good.
EPS Next Y16.68%
EPS Next 2Y14.23%
EPS Next 3Y13.58%
EPS Next 5Y12.87%
Revenue Next Year15.19%
Revenue Next 2Y12.39%
Revenue Next 3Y11.08%
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
A Price/Earnings ratio of 29.54 indicates a quite expensive valuation of AJG.
Based on the Price/Earnings ratio, AJG is valued a bit more expensive than 70.00% of the companies in the same industry.
When comparing the Price/Earnings ratio of AJG to the average of the S&P500 Index (24.41), we can say AJG is valued slightly more expensively.
A Price/Forward Earnings ratio of 24.75 indicates a rather expensive valuation of AJG.
Based on the Price/Forward Earnings ratio, AJG is valued a bit more expensive than the industry average as 72.14% of the companies are valued more cheaply.
AJG's Price/Forward Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 20.59.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.54 | ||
| Fwd PE | 24.75 |
4.2 Price Multiples
61.43% 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 65.71% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 28.18 | ||
| EV/EBITDA | 24.14 |
4.3 Compensation for Growth
AJG's 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 13.58% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.77
PEG (5Y)1.44
EPS Next 2Y14.23%
EPS Next 3Y13.58%
5. Dividend
5.1 Amount
AJG has a yearly dividend return of 0.87%, which is pretty low.
Compared to an average industry Dividend Yield of 4.81, AJG is paying slightly less dividend.
With a Dividend Yield of 0.87, AJG pays less dividend than the S&P500 average, which is at 2.30.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.87% |
5.2 History
The dividend of AJG has a limited annual growth rate of 5.97%.
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)5.97%
Div Incr Years13
Div Non Decr Years33
5.3 Sustainability
44.61% of the earnings are spent on dividend by AJG. 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.
DP44.61%
EPS Next 2Y14.23%
EPS Next 3Y13.58%
ARTHUR J GALLAGHER & CO
NYSE:AJG (7/26/2024, 7:15:53 PM)
After market: 283.58 0 (0%)283.58
+9.61 (+3.51%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap61.96B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.87% |
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(4)
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EPS beat(8)
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EPS beat(12)
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EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
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Revenue beat(4)
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Revenue beat(8)
Avg Revenue beat(8)
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 | 29.54 | ||
| Fwd PE | 24.75 | ||
| 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)1.77
PEG (5Y)1.44
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 1.79% | ||
| ROE | 9.66% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 18.8% | ||
| PM (TTM) | 10.27% | ||
| GM | 44.98% | ||
| 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 | 0.72 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.05 | ||
| Quick Ratio | 1.05 | ||
| 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 Y16.68%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)17.79%
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