ARTHUR J GALLAGHER & CO (AJG) Stock Fundamental Analysis
NYSE:AJG - US3635761097 - Common Stock
303.17 USD
-2.21 (-0.72%)
303.17 USD
0 (0%)
We assign a fundamental rating of 5 out of 10 to AJG. AJG was compared to 143 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 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.
In the past 5 years AJG has always 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 in line with its industry peers.
The Return On Equity of AJG (7.13%) is worse than 64.34% of its industry peers.
Looking at the Return On Invested Capital, with a value of 6.72%, AJG belongs to the top of the industry, outperforming 89.51% of the companies in the same industry.
AJG had an Average Return On Invested Capital over the past 3 years of 7.35%. This is above the industry average of 4.11%.
| 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
Looking at the Profit Margin, with a value of 13.16%, AJG is in the better half of the industry, outperforming 77.62% 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 92.31% of its industry peers.
AJG's Operating Margin has improved in the last couple of years.
AJG has a Gross Margin of 46.51%. This is amongst the best in the industry. AJG outperforms 93.71% 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.
The number of shares outstanding for AJG has been increased compared to 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
AJG has an Altman-Z score of 1.43. 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 (1.43) is better than 86.01% of its industry peers.
AJG has a debt to FCF ratio of 6.54. This is a slightly negative value and a sign of low solvency as AJG would need 6.54 years to pay back of all of its debts.
With a Debt to FCF ratio value of 6.54, AJG is not doing good in the industry: 65.73% of the companies in the same industry are doing better.
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 69.93% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 6.54 | ||
| Altman-Z | 1.43 |
ROIC/WACC0.82
WACC8.15%
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 84.62% of the companies in the same industry.
AJG has a Quick 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.
Looking at the Quick ratio, with a value of 1.36, AJG belongs to the top of the industry, outperforming 84.62% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.36 | ||
| Quick Ratio | 1.36 |
3. Growth
3.1 Past
AJG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 8.23%, which is quite good.
AJG shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 22.61% yearly.
The Revenue has grown by 13.83% in the past year. This is quite good.
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
AJG is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 15.95% yearly.
Based on estimates for the next years, AJG will show a quite strong growth in Revenue. The Revenue will grow by 13.92% on average per year.
EPS Next Y10.02%
EPS Next 2Y16.33%
EPS Next 3Y14.77%
EPS Next 5Y15.95%
Revenue Next Year21.59%
Revenue Next 2Y22.37%
Revenue Next 3Y17.65%
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 29.18, which means the current valuation is very expensive for AJG.
Based on the Price/Earnings ratio, AJG is valued a bit more expensive than 76.92% of the companies in the same industry.
When comparing the Price/Earnings ratio of AJG to the average of the S&P500 Index (27.24), we can say AJG is valued inline with the index average.
AJG is valuated rather expensively with a Price/Forward Earnings ratio of 22.09.
Based on the Price/Forward Earnings ratio, AJG is valued a bit more expensive than 74.13% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of AJG to the average of the S&P500 Index (22.81), we can say AJG is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.18 | ||
| Fwd PE | 22.09 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, AJG is valued a bit more expensive than 62.24% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, AJG is valued a bit more expensive than the industry average as 71.33% of the companies are valued more cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 39.42 | ||
| EV/EBITDA | 18.67 |
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.
AJG's earnings are expected to grow with 14.77% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.91
PEG (5Y)1.29
EPS Next 2Y16.33%
EPS Next 3Y14.77%
5. Dividend
5.1 Amount
With a yearly dividend of 0.85%, AJG is not a good candidate for dividend investing.
AJG's Dividend Yield is slightly below the industry average, which is at 3.52.
With a Dividend Yield of 0.85, AJG pays less dividend than the S&P500 average, which is at 2.34.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.85% |
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
36.32% of the earnings are spent on dividend by AJG. This is a low number and sustainable payout ratio.
The dividend of AJG is growing, but earnings are growing more, so the dividend growth is sustainable.
DP36.32%
EPS Next 2Y16.33%
EPS Next 3Y14.77%
303.17
-2.21 (-0.72%)
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 Change1.52%
Market Cap77.72B
Analysts76.36
Price Target344.34 (13.58%)
Short Float %0.97%
Short Ratio1.61
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.85% |
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)-2.09%
PT rev (3m)-0.92%
EPS NQ rev (1m)1.6%
EPS NQ rev (3m)-12.46%
EPS NY rev (1m)0.07%
EPS NY rev (3m)-0.4%
Revenue NQ rev (1m)1.9%
Revenue NQ rev (3m)-12.4%
Revenue NY rev (1m)-0.06%
Revenue NY rev (3m)0.77%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.18 | ||
| Fwd PE | 22.09 | ||
| P/S | 6.23 | ||
| P/FCF | 39.42 | ||
| P/OCF | 36.66 | ||
| P/B | 3.38 | ||
| P/tB | 18.72 | ||
| EV/EBITDA | 18.67 |
EPS(TTM)10.39
EY3.43%
EPS(NY)13.72
Fwd EY4.53%
FCF(TTM)7.69
FCFY2.54%
OCF(TTM)8.27
OCFY2.73%
SpS48.65
BVpS89.81
TBVpS16.19
PEG (NY)2.91
PEG (5Y)1.29
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 | 1.43 |
F-Score6
WACC8.15%
ROIC/WACC0.82
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 Year21.59%
Revenue Next 2Y22.37%
Revenue Next 3Y17.65%
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%