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 145 industry peers in the Insurance industry. While AJG has a great profitability rating, there are quite some 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
With a Return On Assets value of 2.10%, AJG perfoms like the industry average, outperforming 52.41% of the companies in the same industry.
Looking at the Return On Equity, with a value of 6.98%, AJG is doing worse than 66.21% of the companies in the same industry.
The Return On Invested Capital of AJG (6.31%) is better than 88.28% 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 4.07%.
| 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
With a decent Profit Margin value of 12.96%, AJG is doing good in the industry, outperforming 76.55% of the companies in the same industry.
In the last couple of years the Profit Margin of AJG has grown nicely.
AJG's Operating Margin of 24.43% is amongst the best of the industry. AJG outperforms 87.59% 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 93.79% 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
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so AJG 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 1.59. This is a bad value and indicates that AJG is not financially healthy and even has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.59, AJG belongs to the top of the industry, outperforming 87.59% of the companies in the same industry.
AJG has a debt to FCF ratio of 5.18. This is a neutral value as AJG would need 5.18 years to pay back of all of its debts.
AJG has a Debt to FCF ratio of 5.18. This is in the lower half of the industry: AJG underperforms 66.21% of its industry peers.
A Debt/Equity ratio of 0.56 indicates that AJG is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.56, AJG is not doing good in the industry: 73.10% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.56 | ||
| Debt/FCF | 5.18 | ||
| Altman-Z | 1.59 |
ROIC/WACC0.76
WACC8.32%
2.3 Liquidity
AJG has a Current Ratio of 1.44. 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 1.44, AJG belongs to the best of the industry, outperforming 88.28% of the companies in the same industry.
AJG has a Quick Ratio of 1.44. This is a normal value and indicates that AJG is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of AJG (1.44) is better than 88.28% 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.
AJG shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 22.61% yearly.
AJG shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 13.21%.
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)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
Based on estimates for the next years, AJG will show a quite strong growth in Earnings Per Share. The EPS will grow by 15.95% on average per year.
The Revenue is expected to grow by 13.92% on average over the next years. This is quite good.
EPS Next Y9.95%
EPS Next 2Y16.09%
EPS Next 3Y14.36%
EPS Next 5Y15.95%
Revenue Next Year21.66%
Revenue Next 2Y22.42%
Revenue Next 3Y17.48%
Revenue Next 5Y13.92%
3.3 Evolution
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of 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
With a Price/Earnings ratio of 30.19, 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 75.86% of the companies listed in the same industry.
AJG's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.30.
With a Price/Forward Earnings ratio of 22.80, AJG is valued on the expensive side.
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 73.79% of the companies listed in the same industry.
AJG is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 21.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.19 | ||
| Fwd PE | 22.8 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, AJG is valued a bit more expensive than the industry average as 62.07% of the companies are valued more cheaply.
AJG's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. AJG is more expensive than 71.72% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 31.6 | ||
| EV/EBITDA | 19.87 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
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 14.36% in the coming years.
PEG (NY)3.03
PEG (5Y)1.34
EPS Next 2Y16.09%
EPS Next 3Y14.36%
5. Dividend
5.1 Amount
With a yearly dividend of 0.83%, AJG is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 3.67, AJG is paying slightly less dividend.
With a Dividend Yield of 0.83, AJG pays less dividend than the S&P500 average, which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.83% |
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 their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)5.46%
Div Incr Years14
Div Non Decr Years34
5.3 Sustainability
AJG pays out 35.97% 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.
DP35.97%
EPS Next 2Y16.09%
EPS Next 3Y14.36%
311.54
-2.04 (-0.65%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners91.46%
Inst Owner Change0.02%
Ins Owners0.59%
Ins Owner Change3.24%
Market Cap79.79B
Analysts75.65
Price Target352.57 (13.17%)
Short Float %1.29%
Short Ratio2.33
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.83% |
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)0.1%
PT rev (3m)3.51%
EPS NQ rev (1m)-0.73%
EPS NQ rev (3m)-1.41%
EPS NY rev (1m)-0.46%
EPS NY rev (3m)-4.26%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.88%
Revenue NY rev (1m)-0.47%
Revenue NY rev (3m)-2.63%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.19 | ||
| Fwd PE | 22.8 | ||
| P/S | 6.63 | ||
| P/FCF | 31.6 | ||
| P/OCF | 29.93 | ||
| P/B | 3.57 | ||
| P/tB | 15.73 | ||
| EV/EBITDA | 19.87 |
EPS(TTM)10.32
EY3.31%
EPS(NY)13.67
Fwd EY4.39%
FCF(TTM)9.86
FCFY3.16%
OCF(TTM)10.41
OCFY3.34%
SpS46.96
BVpS87.15
TBVpS19.81
PEG (NY)3.03
PEG (5Y)1.34
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 | 1.59 |
F-Score6
WACC8.32%
ROIC/WACC0.76
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 Y9.95%
EPS Next 2Y16.09%
EPS Next 3Y14.36%
EPS Next 5Y15.95%
Revenue 1Y (TTM)13.21%
Revenue growth 3Y12.07%
Revenue growth 5Y9.94%
Sales Q2Q%15.35%
Revenue Next Year21.66%
Revenue Next 2Y22.42%
Revenue Next 3Y17.48%
Revenue Next 5Y13.92%
EBIT growth 1Y47.14%
EBIT growth 3Y27.14%
EBIT growth 5Y27.83%
EBIT Next Year68.3%
EBIT Next 3Y31.21%
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%