ARTHUR J GALLAGHER & CO (AJG)

US3635761097 - Common Stock

245  +0.33 (+0.13%)

After market: 245 0 (0%)

Fundamental Rating

5

We assign a fundamental rating of 5 out of 10 to AJG. AJG was compared to 140 industry peers in the Insurance industry. While AJG has a great profitability rating, there are some minor concerns on its financial health. While showing a medium growth rate, AJG is valued expensive at the moment.



7

1. Profitability

1.1 Basic Checks

AJG had positive earnings in the past year.
AJG had a positive operating cash flow in the past year.
Each year in the past 5 years AJG has been profitable.
AJG had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

AJG has a Return On Assets of 1.88%. This is comparable to the rest of the industry: AJG outperforms 55.32% of its industry peers.
AJG has a Return On Equity (9.00%) which is in line with its industry peers.
AJG has a Return On Invested Capital of 6.95%. This is amongst the best in the industry. AJG outperforms 90.78% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AJG is above the industry average of 4.21%.
Industry RankSector Rank
ROA 1.88%
ROE 9%
ROIC 6.95%
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

The Profit Margin of AJG (9.63%) is better than 62.41% of its industry peers.
In the last couple of years the Profit Margin of AJG has remained more or less at the same level.
Looking at the Operating Margin, with a value of 17.38%, AJG is in the better half of the industry, outperforming 74.47% of the companies in the same industry.
AJG's Operating Margin has improved in the last couple of years.
The Gross Margin of AJG (44.85%) is better than 94.33% of its industry peers.
AJG's Gross Margin has improved in the last couple of years.
Industry RankSector Rank
OM 17.38%
PM (TTM) 9.63%
GM 44.85%
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%

4

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.
AJG has a better debt/assets ratio than last year.

2.2 Solvency

Based on the Altman-Z score of 1.22, we must say that AJG is in the distress zone and has some risk of bankruptcy.
The Altman-Z score of AJG (1.22) is better than 87.23% of its industry peers.
AJG has a debt to FCF ratio of 4.33. This is a neutral value as AJG would need 4.33 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 4.33, AJG is in line with its industry, outperforming 43.26% of the companies in the same industry.
AJG has a Debt/Equity ratio of 0.68. This is a neutral value indicating AJG is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.68, AJG is not doing good in the industry: 70.92% of the companies in the same industry are doing better.
Industry RankSector Rank
Debt/Equity 0.68
Debt/FCF 4.33
Altman-Z 1.22
ROIC/WACC0.84
WACC8.29%

2.3 Liquidity

A Current Ratio of 1.03 indicates that AJG should not have too much problems paying its short term obligations.
AJG has a better Current ratio (1.03) than 79.43% of its industry peers.
AJG has a Quick Ratio of 1.03. 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 1.03, AJG is in the better half of the industry, outperforming 79.43% of the companies in the same industry.
Industry RankSector Rank
Current Ratio 1.03
Quick Ratio 1.03

6

3. Growth

3.1 Past

AJG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 16.60%, which is quite good.
The Earnings Per Share has been growing by 20.54% on average over the past years. This is a very strong growth
Looking at the last year, AJG shows a quite strong growth in Revenue. The Revenue has grown by 17.79% in the last year.
The Revenue has been growing slightly by 7.75% on average over the past years.
EPS 1Y (TTM)16.6%
EPS 3Y22.9%
EPS 5Y20.54%
EPS growth Q2Q42.31%
Revenue 1Y (TTM)17.79%
Revenue growth 3Y12.87%
Revenue growth 5Y7.75%
Revenue growth Q2Q19.9%

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 12.69% yearly.
AJG is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 12.27% yearly.
EPS Next Y17.4%
EPS Next 2Y15.08%
EPS Next 3Y12.69%
EPS Next 5YN/A
Revenue Next Year13.87%
Revenue Next 2Y12.17%
Revenue Next 3Y12.27%
Revenue Next 5YN/A

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.
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.

2

4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 27.90, the valuation of AJG can be described as expensive.
Based on the Price/Earnings ratio, AJG is valued a bit more expensive than 66.67% of the companies in the same industry.
AJG is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 26.15, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 23.77, AJG is valued on the expensive side.
AJG's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. AJG is more expensive than 67.38% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of AJG to the average of the S&P500 Index (21.62), we can say AJG is valued inline with the index average.
Industry RankSector Rank
PE 27.9
Fwd PE 23.77

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of AJG is on the same level as its industry peers.
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 60.99% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 28.88
EV/EBITDA 24.44

4.3 Compensation for Growth

The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
AJG has a very decent profitability rating, which may justify a higher PE ratio.
AJG's earnings are expected to grow with 12.69% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.6
PEG (5Y)1.36
EPS Next 2Y15.08%
EPS Next 3Y12.69%

5

5. Dividend

5.1 Amount

AJG has a yearly dividend return of 0.98%, which is pretty low.
AJG's Dividend Yield is comparable with the industry average which is at 4.07.
With a Dividend Yield of 0.98, AJG pays less dividend than the S&P500 average, which is at 2.45.
Industry RankSector Rank
Dividend Yield 0.98%

5.2 History

The dividend of AJG has a limited annual growth rate of 5.97%.
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)5.97%
Div Incr Years13
Div Non Decr Years20

5.3 Sustainability

AJG pays out 48.85% of its income as dividend. 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.
DP48.85%
EPS Next 2Y15.08%
EPS Next 3Y12.69%

ARTHUR J GALLAGHER & CO

NYSE:AJG (2/23/2024, 7:04:00 PM)

After market: 245 0 (0%)

245

+0.33 (+0.13%)

Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap53.09B
Analysts
Price Target
Dividend
Industry RankSector Rank
Dividend Yield 0.98%
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(16)
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Revenue beat(2)
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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 RankSector Rank
PE 27.9
Fwd PE 23.77
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)1.6
PEG (5Y)1.36
Profitability
Industry RankSector Rank
ROA 1.88%
ROE 9%
ROCE
ROIC
ROICexc
ROICexgc
OM 17.38%
PM (TTM) 9.63%
GM 44.85%
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 Turnover0.2
Health
Industry RankSector Rank
Debt/Equity 0.68
Debt/FCF
Debt/EBITDA
Cap/Depr
Cap/Sales
Interest Coverage
Cash Conversion
Profit Quality
Current Ratio 1.03
Quick Ratio 1.03
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)
Growth
EPS 1Y (TTM)16.6%
EPS 3Y22.9%
EPS 5Y
EPS growth Q2Q
EPS Next Y17.4%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)17.79%
Revenue growth 3Y12.87%
Revenue growth 5Y
Revenue growth 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