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Arthur J Gallagher & Co (AJG)
NYSE:AJG
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Arthur J Gallagher & Co
(NYSE:AJG)
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Select Model
Rating:69Neutral
Price Target:
$239.00
▲(4.73% Upside)
Action:DowngradedDate:02/20/26
AJG scores well on fundamentals and management’s outlook (durable growth, margin expansion guidance, and continued M&A/synergy execution), but the overall score is held back by weak technicals (below key moving averages with negative momentum) and a premium valuation (P/E ~37 with a modest yield).
Positive Factors
Multi-year revenue growth & cash conversion
Gallagher has delivered durable top-line expansion and high-quality earnings: revenue compounded strongly 2020–2025 and free cash flow conversion remains near ~0.87–0.95x. That persistent cash conversion supports reinvestment, dividends and strategic optionality over the next several quarters.
M&A momentum with explicit synergy targets
Large-scale, executed acquisitions meaningfully expanded revenue and include quantified, time-bound synergy targets. Clear synergy schedules improve visibility on accretion, reduce integration uncertainty, and support durable margin gains and cross-selling over the medium term.
Substantial M&A firepower & capital flexibility
Available cash, expected free cash flow and investment-grade borrowing capacity provide roughly $10B of acquisition firepower. This structural capital flexibility allows the firm to consolidate a fragmented brokerage market and pursue scale-enhancing deals without immediate equity issuance.
Negative Factors
High absolute debt despite improved leverage
Although leverage ratios improved, the company carries a large absolute debt burden that has grown versus earlier years. Elevated nominal debt can constrain flexibility if earnings soften or rates remain higher, increasing interest exposure and limiting optionality for organic investment.
Operating cash flow softened; FCF growth stalled in 2025
Free cash flow conversion is historically strong, but the recent drop in operating cash flow and flat FCF growth signal cooling cash momentum. That reduces internal funding capacity for acquisitions or capital projects and increases reliance on external financing over the next several quarters.
Growth dependent on continued M&A; execution risk
Management's growth plan relies heavily on closing numerous acquisitions to absorb ~$10B of capacity. Securing many appropriately priced targets and realizing synergies is operationally intensive; seller hesitancy or valuation headwinds could materially slow growth and margin expansion.
Arthur J Gallagher & Co (AJG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$58.67B
Dividend Yield1.01%
Average Volume (3M)2.66M
Price to Earnings (P/E)39.7
Beta (1Y)0.42
Revenue Growth17.17%
EPS Growth19.12%
CountryUS
Employees53,714
SectorFinancial
Sector Strength70
IndustryInsurance - Brokers
Share Statistics
EPS (TTM)2.38
Shares Outstanding257,100,000
10 Day Avg. Volume2,470,512
30 Day Avg. Volume2,661,157
Financial Highlights & Ratios
PEG Ratio-3.74
Price to Book (P/B)2.89
Price to Sales (P/S)4.83
P/FCF Ratio0.00
Enterprise Value/Market Cap1.22
Enterprise Value/Revenue5.13
Enterprise Value/Gross Profit9.37
Enterprise Value/Ebitda19.54
Forecast
1Y Price Target
$275.44Price Target Upside20.70% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
EPS Forecast (FY)13.27
Revenue Forecast (FY)$16.94B
Arthur J Gallagher & Co Business Overview & Revenue Model
Company DescriptionArthur J. Gallagher & Co., together with its subsidiaries, provides insurance brokerage, consulting, third-party claims settlement, and administration services in the United States, Australia, Bermuda, Canada, the Caribbean, New Zealand, India, and the United Kingdom. It operates through Brokerage and Risk Management segments. The Brokerage segment consists of retail and wholesale insurance brokerage operations; assists retail brokers and other non-affiliated brokers in the placement of specialized and hard-to-place insurance; acts as a brokerage wholesaler, managing general agent, and managing general underwriter for distributing specialized insurance coverage's to underwriting enterprises. This segment also performs activities, including marketing, underwriting, issuing policies, collecting premiums, appointing and supervising other agents, paying claims, and negotiating reinsurance; and offers brokerage and consulting services to businesses and organizations, including commercial, not-for-profit, and public entities, as well as individuals in the areas of insurance placement, risk of loss management, and management of employer sponsored benefit programs. The Risk Management segment provides contract claim settlement and administration services to enterprises and public entities; and claims management, loss control consulting, and insurance property appraisal services. The company offers its services through a network of correspondent insurance brokers and consultants. It serves commercial, industrial, public, religious, and not-for-profit entities. The company was incorporated in 1927 and is headquartered in Rolling Meadows, Illinois.
How the Company Makes MoneyArthur J Gallagher & Co primarily generates revenue through commissions and fees earned from providing insurance brokerage services. The company acts as an intermediary between clients and insurance carriers, earning commissions based on the premiums paid by clients for their insurance policies. Additionally, AJG earns revenues from consulting services related to risk management and employee benefits, often charging fees for its advisory services. The company also benefits from significant partnerships with various insurance carriers, allowing it to offer a wide array of products and access to specialized insurance markets. Moreover, acquisitions of smaller brokerage firms contribute to revenue growth by expanding AJG's market reach and client base.
Arthur J Gallagher & Co Key Performance Indicators (KPIs)
Any
Revenue by Segment
Analyzes revenue across different business segments, highlighting which areas are driving growth and where the company might need to improve or capitalize on emerging opportunities.
Analyzes revenue across different business segments, highlighting which areas are driving growth and where the company might need to improve or capitalize on emerging opportunities.
Data provided by:
The Fly
The FlyArthur J Gallagher & Co Earnings Call Summary
Earnings Call Date:Jan 29, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 23, 2026
Earnings Call Sentiment Positive
The call presented a strongly positive operational and financial picture: high revenue and adjusted EBITDA growth, broad-based organic growth across geographies and lines, steady producer retention, successful large-scale M&A execution (> $3.5B acquired revenue in 2025) and clear synergy targets. Management reiterated durable underlying margin expansion (40–60 bps) and substantial M&A firepower (up to ~$10B) while providing detailed modeling aids and transparency on comparability adjustments. Negative items were primarily near-term and technical: property pricing softness, reinsurance price declines in parts of the market, lost investment income related to the Assured Partners transaction (creating headline margin noise), and some quarterly accounting impacts from life sales and deferred revenue assumptions. These lowlights create short-term volatility but do not appear to materially impair the company’s growth trajectory or strategic outlook according to management.Q4-2025 Updates
Positive Updates
Strong Q4 and Full-Year Revenue Growth
Fourth quarter revenue growth exceeded 30% (management: "more than 30%"), driven by M&A and organic growth. Full-year 2025 combined brokerage and risk management revenue grew 21% with 6% organic growth.
Robust Profitability and EBITDA Expansion
Adjusted EBITDA (and adjusted EBITDAC) growth of 30% in Q4 and 26% for full-year 2025; management noted 23 consecutive quarters of double-digit EBITDA growth. Full-year adjusted EBITDAC margin for combined brokerage and risk management was 35%, up ~70 basis points on an underlying comparable basis.
Brokerage Segment Outperformance
Brokerage reported revenue growth of 38% in Q4 with organic growth of 5%. Q4 brokerage adjusted EBITDAC margin was 32.2% with underlying margin expansion of ~50 basis points (within prior guidance of 40–60 bps). Guidance: brokerage organic growth of ~5.5% for full-year 2026.
Gallagher Bassett (Risk Management) Strength
Risk management (Gallagher Bassett) Q4 revenue growth 13% with organic growth of 7%; Q4 adjusted EBITDAC margin 21.6% (slightly ahead of December expectations). Outlook: full-year 2026 organic growth ~7% and margins expected in the 21–22% range.
Broad-Based Organic Growth by Region and Line
Organic growth across multiple geographies and lines in Q4: Americas retail P&C +5%, UK & EMEA +7%, APAC +3%; specialty/US wholesale +7%, reinsurance +8%, benefits +1%. Excluding property, renewal premium change would be roughly +3%.
M&A Momentum, Integration Progress and Synergy Targets
Completed seven Q4 mergers totaling ~ $145 million of estimated annualized revenue; full-year 2025 acquired annualized revenue > $3.5 billion. Assured Partners integration ahead of plan (rebrand complete in US retail ops) with run-rate synergies estimated at $160 million by 2026 and $260–$280 million by early 2028 (management sees potential upside). Pipeline: >40 term sheets or being prepared representing ~ $350 million of annualized revenue.
Large M&A Firepower and Capital Position
Management indicated potential capacity of close to $10 billion to fund M&A over the next two years before using stock, supported by available cash, expected free cash flow, and investment-grade borrowing capacity.
Stable Producer Retention and Strong Culture
Producer retention metrics described as "dead flat" and stable versus historical norms (since 2019). Management emphasized a strong sales-driven culture, large internship pipeline (~600 interns/year) and tools (Gallagher Drive) to support retention and productivity.
Positive Customer Activity and Data Signals
Proprietary data showed solid client business activity in Q4 (audits, endorsements, cancellations) better than Q4 2024 and Q3 2025; favorable trends continued into early January, with no signs of economic weakness per management.
Investments in Tech and AI to Improve Service and Efficiency
Company is investing in AI and automation (notably in claims at Gallagher Bassett) and digital tools to improve speed, service quality and cost structure; management views AI as an enabler rather than a near-term disintermediator of producers.
Negative Updates
Property Pricing Softness
Property renewal premium change was down ~5% in the quarter; property reinsurance market experienced double-digit rate decreases in some areas and property reinsurance premiums were down mid- to high-single digits year-over-year, creating a two-speed market (property soft, casualty firmer).
Lost Investment Income and Headline Margin Noise
Company lost the investment income it previously earned on funds held to buy Assured Partners, creating headline margin noise (management referred to a rolling impact and removed that item when calculating underlying expansion). This loss of interest income contributes to comparability issues and near-term headline margin pressure.
Quarterly Accounting Noise from Life Sales and Deferred Revenue Assumptions
Life sales and changes in deferred revenue assumptions produced quarterly volatility (Q4 deferred revenue impact ~ -2%; life sales contributed to comparability noise). Management estimated the net EBITDA magnitude of these items was modest (~$25 million of EBITDA) but they cloud quarterly organic comparisons.
Near-Term Headline Margin Volatility
Management warned of headline margin noise in early 2026 (particularly Q1/Q2) driven by the lost investment income on funds held for AP and FX/one-time items; underlying margin expansion guidance (40–60 bps) remains intact but headline numbers will be affected.
Corporate Segment One-Time / Noncash Items
Adjusted corporate line in Q4 was a couple of cents below midpoint of expectations due to a noncash unrealized FX remeasurement loss, a small tax item, and noncash GAAP pension annuitization expense that will reverse through OCI (no cash injection required).
Reinsurance Rate Declines, Especially in Property Towers
Property reinsurance rates decreased in the teens in parts of the market; while lower layers held up better, top-end layers saw pressure—this reduces reinsurance premium pools despite continued client demand for cover.
M&A Execution & Valuation/Volume Challenges
To deploy large amounts of available capital (e.g., ~$10 billion) would require many deals (management acknowledged potentially dozens of acquisitions); management also noted potential short-term seller hesitancy and valuation compression as contributors that could slow pipeline conversion.
Rising Medical Costs Pressure Benefits Clients
Management expects medical costs to be up high single digits in 2026 driven by utilization, provider consolidation, and high-cost therapies—this increases client demand for advisory but also raises cost pressures and complexity in benefits management.
Company Guidance
Management guided brokerage organic growth of about 5.5% for full‑year 2026 (Q4 brokerage organic was 5%) and Gallagher Bassett (risk management) organic of ~7% with FY‑26 margins seen in the 21–22% range (Q4 GB margin 21.6%); they expect underlying brokerage margin expansion of 40–60 bps in 2026 (Q4 improvement ~50 bps; Q4 brokerage adj. EBITDAC margin 32.2%), and company adjusted EBITDAC margin was 35% for 2025 (up ~70 bps on a comparable basis). Modeling assumptions include two 25‑bp rate cuts (Apr and Sep), removal of interest income on funds held to buy Assured Partners, FX and depreciation/earn‑out assumptions, and cash taxes of ~10% of EBITDAC; available cash, expected free cash flow and borrowings could provide roughly $10 billion to fund M&A before using stock. M&A/synergy guidance: Q4 closed seven deals (~$145M of annualized revenue), full‑year 2025 acquired annualized revenue >$3.5B, a pipeline of >40 term sheets (~$350M annualized), and Assured Partners synergies of $160M by ’26 and $260–$280M by early ’28; other 2025 metrics cited include 21% revenue growth, 6% organic growth, and 26% adjusted EBITDAC growth.Arthur J Gallagher & Co Financial Statement Overview
Summary
Strong multi-year revenue growth and solid operating profitability, with consistently strong free-cash-flow conversion. Offsetting factors include 2025 net margin pressure, softer 2025 operating cash flow versus 2024, and sizable absolute debt despite improving leverage ratios.Income Statement
Revenue has compounded strongly from 2020 to 2025, with 2025 up ~7% year over year after a larger 2024 step-up. Profitability is solid for the business model, with 2025 operating profitability improving versus 2023 and a strong gross profit profile; however, net margin dipped in 2025 versus 2024, suggesting higher below-the-line costs or financing/tax drag. Overall, the income statement shows durable growth and healthy operating leverage, tempered by some recent pressure at the net income line.83
Very Positive
Balance Sheet
The balance sheet looks moderately leveraged: debt-to-equity improved to ~0.60 in 2025 from ~0.77 in 2023, and equity has grown meaningfully over time. That said, absolute debt is high and has increased versus earlier years, which can limit flexibility if earnings weaken or rates stay elevated. Returns on equity are positive but have trended down from earlier years, indicating profitability isn’t rising as quickly as the equity base.74
Positive
Cash Flow
Free cash flow is consistently strong and closely tracks net income (roughly ~0.87–0.95x across the period), supporting earnings quality. However, operating cash flow fell in 2025 versus 2024 and free cash flow growth was essentially flat in 2025, pointing to some near-term cash generation softness after a very strong 2024. Overall cash conversion remains good, but momentum cooled in the latest year.70
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 13.94B | 11.55B | 10.07B | 8.55B | 8.21B |
| Gross Profit | 7.63B | 4.88B | 4.25B | 3.60B | 2.98B |
| EBITDA | 3.66B | 3.10B | 2.18B | 2.18B | 1.77B |
| Net Income | 1.49B | 1.46B | 969.50M | 1.11B | 906.80M |
Balance Sheet | |||||
| Total Assets | 70.67B | 64.26B | 51.62B | 38.36B | 33.34B |
| Cash, Cash Equivalents and Short-Term Investments | 1.40B | 14.99B | 971.50M | 738.40M | 402.60M |
| Total Debt | 14.00B | 13.49B | 8.32B | 6.42B | 6.59B |
| Total Liabilities | 47.32B | 44.08B | 40.80B | 29.17B | 24.78B |
| Stockholders Equity | 23.32B | 20.15B | 10.78B | 9.14B | 8.51B |
Cash Flow | |||||
| Free Cash Flow | 0.00 | 2.44B | 1.84B | 1.21B | 1.58B |
| Operating Cash Flow | 0.00 | 2.58B | 2.03B | 1.39B | 1.70B |
| Investing Cash Flow | 0.00 | -1.59B | -3.29B | -1.00B | -3.43B |
| Financing Cash Flow | 0.00 | 13.05B | 2.87B | 212.60M | 2.68B |
Arthur J Gallagher & Co Technical Analysis
Neutral
228.20
Price Trends
243.61
Negative
253.36
Negative
281.40
Negative
Market Momentum
-7.01
Negative
49.36
Neutral
94.45
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AJG, the sentiment is Neutral. The current price of 228.2 is above the 20-day moving average (MA) of 224.52, below the 50-day MA of 243.61, and below the 200-day MA of 281.40, indicating a neutral trend. The MACD of -7.01 indicates Negative momentum. The RSI at 49.36 is Neutral, neither overbought nor oversold. The STOCH value of 94.45 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AJG.
Arthur J Gallagher & Co Risk Analysis
Arthur J Gallagher & Co disclosed 35 risk factors in its most recent earnings report. Arthur J Gallagher & Co reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Arthur J Gallagher & Co Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $12.55B | 25.38 | 26.19% | 1.90% | 9.64% | 15.87% | |
71 Outperform | $71.88B | 19.71 | 47.76% | 0.82% | 14.06% | 5.52% | |
69 Neutral | $58.67B | 39.73 | 6.87% | 1.01% | 17.17% | 19.12% | |
68 Neutral | $28.85B | 18.82 | 20.17% | 1.14% | ― | ― | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
66 Neutral | $24.45B | 22.73 | 10.98% | 0.77% | 17.87% | -9.35% |
* Financial Sector Average
AJG
Arthur J Gallagher & Co
228.20
-110.63
-32.65%
AON
Aon
335.47
-70.38
-17.34%
BRO
Brown & Brown
71.82
-47.18
-39.64%
ERIE
Erie Indemnity Company
269.44
-172.70
-39.06%
WTW
Willis Towers Watson
305.17
-32.32
-9.58%
Arthur J Gallagher & Co Corporate Events
Business Operations and StrategyFinancial Disclosures
Arthur J. Gallagher posts strong Q4 2025 growth
Positive
Jan 29, 2026
Arthur J. Gallagher & Co. reported its fourth quarter and full-year 2025 financial results on January 29, 2026, highlighting strong growth in its core brokerage and risk management operations. Brokerage revenues before reimbursements rose to $3.17 billion in the fourth quarter of 2025 from $2.30 billion a year earlier, while adjusted brokerage revenues reached $3.15 billion and adjusted EBITDAC increased to $1.02 billion, underpinning adjusted diluted earnings per share of $2.74 versus $2.33 in the prior-year period. The risk management segment also grew, with reported revenues climbing to $417 million from $369 million, and adjusted EBITDAC and adjusted earnings per share showing modest improvement year over year. Results reflected the impact of acquisition-related activities, workforce and lease termination costs, and higher amortization of intangible assets, as well as foreign currency effects, with the company providing both GAAP and non-GAAP measures to give investors additional perspective on underlying operational performance.
The most recent analyst rating on (AJG) stock is a Hold with a $282.00 price target. To see the full list of analyst forecasts on Arthur J Gallagher & Co stock, see the AJG Stock Forecast page.
Financial DisclosuresShareholder Meetings
Arthur J. Gallagher & Co. Plans Investor Meeting
Neutral
Dec 16, 2025
On December 3, 2025, Arthur J. Gallagher & Co. announced plans to host an investor meeting on December 16, 2025. The meeting will be accessible via a webcast on the company’s website, featuring updated CFO Commentary with estimates for 2025 and 2026, and information on net after-tax cash flows from clean energy investments.
The most recent analyst rating on (AJG) stock is a Hold with a $276.00 price target. To see the full list of analyst forecasts on Arthur J Gallagher & Co stock, see the AJG Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.