ARTHUR J GALLAGHER & CO (AJG) Stock Fundamental Analysis
USA - NYSE:AJG - US3635761097 - Common Stock
310.48 USD
+1.81 (+0.59%)
310.48 USD
0 (0%)
We assign a fundamental rating of 5 out of 10 to AJG. AJG was compared to 146 industry peers in the Insurance industry. AJG has an excellent profitability rating, 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.
In the past 5 years AJG has always been profitable.
Each year in the past 5 years AJG had a positive operating cash flow.
1.2 Ratios
AJG has a Return On Assets of 2.05%. This is comparable to the rest of the industry: AJG outperforms 54.11% of its industry peers.
With a Return On Equity value of 7.13%, AJG is not doing good in the industry: 65.75% of the companies in the same industry are doing better.
AJG has a better Return On Invested Capital (6.72%) than 88.36% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AJG is above the industry average of 4.43%.
| 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
AJG's Profit Margin of 13.16% is fine compared to the rest of the industry. AJG outperforms 76.03% of its industry peers.
In the last couple of years the Profit Margin of AJG has grown nicely.
AJG has a Operating Margin of 25.44%. This is amongst the best in the industry. AJG outperforms 91.78% of its industry peers.
AJG's Operating Margin has improved in the last couple of years.
The Gross Margin of AJG (46.51%) is better than 93.84% 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
AJG has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
AJG has more shares outstanding than it did 1 year ago.
AJG has more shares outstanding than it did 5 years ago.
Compared to 1 year ago, AJG has a worse debt to assets ratio.
2.2 Solvency
Based on the Altman-Z score of 1.45, we must say that AJG is in the distress zone and has some risk of bankruptcy.
AJG has a Altman-Z score of 1.45. This is amongst the best in the industry. AJG outperforms 82.88% 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.
AJG has a worse Debt to FCF ratio (6.54) than 64.38% of its industry peers.
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 70.55% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.53 | ||
| Debt/FCF | 6.54 | ||
| Altman-Z | 1.45 |
ROIC/WACC0.84
WACC8.05%
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.
The Current ratio of AJG (1.36) is better than 84.25% of its industry peers.
A Quick Ratio of 1.36 indicates that AJG should not have too much problems paying its short term obligations.
AJG's Quick ratio of 1.36 is amongst the best of the industry. AJG outperforms 84.25% of its industry peers.
| 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.
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.
Looking at the last year, AJG shows a quite strong growth in Revenue. The Revenue has grown by 13.83% in the last year.
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)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 16.30% yearly.
AJG is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 13.92% yearly.
EPS Next Y10.95%
EPS Next 2Y16.86%
EPS Next 3Y15.2%
EPS Next 5Y16.3%
Revenue Next Year22.58%
Revenue Next 2Y22.12%
Revenue Next 3Y17.74%
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.
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
Based on the Price/Earnings ratio of 29.88, the valuation of AJG can be described as expensive.
Based on the Price/Earnings ratio, AJG is valued a bit more expensive than 78.08% of the companies in the same industry.
AJG's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.86.
A Price/Forward Earnings ratio of 22.42 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 74.66% of the companies are valued more cheaply.
AJG is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 23.32, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.88 | ||
| Fwd PE | 22.42 |
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 65.75% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, AJG is valued a bit more expensive than 70.55% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 40.37 | ||
| EV/EBITDA | 19.13 |
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.
AJG's earnings are expected to grow with 15.20% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.73
PEG (5Y)1.32
EPS Next 2Y16.86%
EPS Next 3Y15.2%
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 3.38.
With a Dividend Yield of 0.84, AJG pays less dividend than the S&P500 average, which is at 2.41.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.84% |
5.2 History
The dividend of AJG has a limited annual growth rate of 5.46%.
AJG has been paying a dividend for at least 10 years, so it has 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
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 2Y16.86%
EPS Next 3Y15.2%
310.48
+1.81 (+0.59%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners90.89%
Inst Owner Change-1.48%
Ins Owners0.6%
Ins Owner Change0.68%
Market Cap79.59B
Analysts75
Price Target348.36 (12.2%)
Short Float %1.36%
Short Ratio2.29
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.84% |
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)1.17%
PT rev (3m)-1.2%
EPS NQ rev (1m)3.27%
EPS NQ rev (3m)5.7%
EPS NY rev (1m)0.84%
EPS NY rev (3m)0.66%
Revenue NQ rev (1m)2.52%
Revenue NQ rev (3m)4.59%
Revenue NY rev (1m)0.81%
Revenue NY rev (3m)0.65%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.88 | ||
| Fwd PE | 22.42 | ||
| P/S | 6.38 | ||
| P/FCF | 40.37 | ||
| P/OCF | 37.55 | ||
| P/B | 3.46 | ||
| P/tB | 19.17 | ||
| EV/EBITDA | 19.13 |
EPS(TTM)10.39
EY3.35%
EPS(NY)13.85
Fwd EY4.46%
FCF(TTM)7.69
FCFY2.48%
OCF(TTM)8.27
OCFY2.66%
SpS48.65
BVpS89.81
TBVpS16.19
PEG (NY)2.73
PEG (5Y)1.32
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 | 1.45 |
F-Score6
WACC8.05%
ROIC/WACC0.84
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 Y10.95%
EPS Next 2Y16.86%
EPS Next 3Y15.2%
EPS Next 5Y16.3%
Revenue 1Y (TTM)13.83%
Revenue growth 3Y12.07%
Revenue growth 5Y9.94%
Sales Q2Q%17.86%
Revenue Next Year22.58%
Revenue Next 2Y22.12%
Revenue Next 3Y17.74%
Revenue Next 5Y13.92%
EBIT growth 1Y51.53%
EBIT growth 3Y27.14%
EBIT growth 5Y27.83%
EBIT Next Year67.25%
EBIT Next 3Y31.74%
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%