Arthur J Gallagher & Co (AJG) AI Stock Analysis

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Arthur J Gallagher & Co

(NYSE:AJG)

Rating:75Outperform

Price Target:

$338.00

▲(12.98% Upside)

Arthur J Gallagher & Co's strong financial performance and positive earnings call sentiment are the most significant factors driving the score. The company's robust revenue growth, profitability, and strategic M&A activities position it well for future growth. However, the high P/E ratio and mixed technical indicators suggest caution. The stock's valuation and technical analysis present moderate risks, balancing the overall score.

Positive Factors

Acquisition Strategy

The acquisition of AssuredPartners is expected to enhance Arthur J. Gallagher's middle market strategy.

Revenue Growth

Arthur J. Gallagher is projected to achieve revenue growth that is twice the peer average through 2027.

Negative Factors

Market Competition

If AJG/AP was disallowed, WTW is a potential winner with less competition for larger platforms.

Organic Growth

The organic miss was driven by a further decline in property rate.

Arthur J Gallagher & Co (AJG) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$76.71B

Dividend Yield0.85%

Average Volume (3M)1.64M

Price to Earnings (P/E)45.1

Beta (1Y)0.41

Revenue Growth15.03%

EPS Growth28.86%

CountryUS

Employees53,714

SectorFinancial

Sector Strength70

IndustryInsurance - Brokers

Share Statistics

EPS (TTM)2.33

Shares Outstanding256,400,000

10 Day Avg. Volume1,310,375

30 Day Avg. Volume1,639,564

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap1.07

Enterprise Value/Revenue6.60

Enterprise Value/Gross Profit15.15

Enterprise Value/Ebitda23.55

Forecast

1Y Price Target

$342.23

Price Target Upside14.39% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering15

Arthur J Gallagher & Co Business Overview & Revenue Model

Company DescriptionArthur J Gallagher & Co (AJG) is a global insurance brokerage and risk management services firm headquartered in Itasca, Illinois. Established in 1927, AJG operates in various sectors, including commercial insurance, employee benefits, and personal insurance. The company offers a wide range of services such as risk management consulting, insurance brokerage, and underwriting, serving clients from small businesses to large corporations across diverse industries.

How the Company Makes MoneyAJG generates revenue primarily through commissions and fees earned from its insurance brokerage services, where it acts as an intermediary between clients and insurance carriers. The company charges clients for consulting services related to risk management and employee benefits, providing tailored solutions to meet their specific needs. Key revenue streams include the brokerage of property and casualty insurance, employee benefits consulting, and risk management services. AJG also earns income from the sale of insurance products and services, as well as from its global network of partnerships with various insurance providers, enhancing its service offerings and market reach. Additionally, AJG's growth strategy includes acquisitions of smaller agencies, which expands its client base and revenue potential.

Arthur J Gallagher & Co Key Performance Indicators (KPIs)

Any

EBITDAC

EBITDAC
Focuses on earnings before interest, taxes, depreciation, amortization, and change in control, offering a clear view of operational profitability and cash flow potential.

Chart InsightsArthur J. Gallagher & Co's EBITDAC for both Brokerage and Risk Management segments shows consistent growth, with the Brokerage segment achieving a notable increase in recent quarters. The latest earnings call highlights a 17% revenue growth in Brokerage and 9% in Risk Management, supported by strong M&A activity. Despite challenges in the property insurance market, the company maintains a positive outlook, expecting continued organic growth. The pending Assured Partners acquisition could further enhance their market position, though regulatory approval remains a hurdle.

Data provided by:

Main Street Data

Arthur J Gallagher & Co Earnings Call Summary

Earnings Call Date:Jul 31, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Oct 23, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong revenue and organic growth across segments, successful M&A activities, and future growth prospects through technology and AI. However, challenges remain with property revenue declines and uncertainties in the Assured Partners acquisition timing.

Q2-2025 Updates

Positive Updates

Strong Revenue Growth

The combined Brokerage and Risk Management segments posted a 16% growth in revenue, with a reported net earnings margin of 17.3% and adjusted EBITDAC margin of 34.5%, which is up 307 basis points year-over-year.

Consistent Organic Growth

The Brokerage segment reported 5.3% organic growth, and Risk Management segment reported 6.2% organic growth. The company projects full-year organic growth in Brokerage to be in the 6.5% to 7.5% range.

M&A Activity and Pipeline

During the second quarter, the company completed 9 new mergers, representing around $290 million of estimated annualized revenue. The M&A pipeline includes around 40 term sheets, representing around $500 million of annualized revenue.

Positive Margin Expansion

The Brokerage segment adjusted EBITDAC margin expanded 334 basis points to 36.4% year-over-year, and the Risk Management segment adjusted EBITDAC margin was 21%, better than June expectations.

Exciting Future Prospects

The company is well-positioned for future growth with niche expertise, extensive data and analytics offerings, global resources, and opportunities for further margin expansion through technology and AI initiatives.

Negative Updates

Property Revenue Decline

The property line saw a 7% decline in global renewal premium changes due to rate and exposure. This is a couple of points below expectations.

Challenges in Casualty Lines

While casualty lines overall were up 8%, there are continued concerns over prior year loss development and rising loss trends due to inflation and the litigation environment.

Uncertainty in Timing of Assured Partners Acquisition

The completion of the Assured Partners transaction is anticipated in the third quarter, but there are ongoing engagements with DOJ, and the timing remains uncertain.

Company Guidance

During the second quarter of fiscal year 2025, Arthur J. Gallagher & Company reported significant growth across its business segments. The combined Brokerage and Risk Management segments saw a revenue increase of 16%, with organic growth at 5.4%. The company's reported net earnings margin was 17.3%, while the adjusted EBITDAC margin expanded by 307 basis points year-over-year to 34.5%, marking a 26% growth in adjusted EBITDAC. The Brokerage segment alone experienced a 17% rise in reported revenue and a 5.3% organic growth, despite challenges in CAT property renewal premiums. Across various lines, property renewal premiums decreased by 7%, and casualty lines increased by 8%. The Risk Management segment reported a 9% revenue growth, with a 6.2% organic increase, and an adjusted EBITDAC margin of 21%. Gallagher also completed nine mergers, adding approximately $290 million in annualized revenue, while maintaining a strong M&A pipeline with 40 term sheets representing around $500 million in potential revenue.

Arthur J Gallagher & Co Financial Statement Overview

Summary

Arthur J Gallagher & Co exhibits strong financial health with consistent revenue growth and solid profitability margins. The balance sheet is robust with low leverage and stable returns on equity. While cash flow generation has seen some decline, the company maintains a strong cash conversion ratio, indicating resilience. Overall, the financial position is strong, with opportunities to enhance cash flow efficiency.

Income Statement

Very Positive

Arthur J Gallagher & Co has demonstrated consistent revenue growth with a 3.7% increase in TTM, following a strong 14.7% growth in the previous year. The company maintains healthy profitability with a gross profit margin of 55.18% and a net profit margin of 13.16% in TTM. EBIT and EBITDA margins are also robust at 20.97% and 28.25%, respectively, indicating efficient operations and cost management.

Balance Sheet

Positive

The company's balance sheet shows a strong equity position with a debt-to-equity ratio of 0.67 in the latest annual report, improving to 0.05 in TTM, reflecting reduced leverage. Return on equity is stable at 8.45% in TTM, suggesting effective use of shareholder funds. The equity ratio stands at 28.73%, indicating a solid capital structure.

Cash Flow

Positive

Cash flow analysis reveals a decline in free cash flow growth by 21.91% in TTM, which is a concern. However, the company maintains a strong free cash flow to net income ratio of 93.02%, indicating good cash conversion. The operating cash flow to net income ratio is lower at 4.98%, suggesting potential areas for improvement in cash generation from operations.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	12.47B	11.55B	10.07B	8.55B	8.21B	7.01B
Gross Profit	5.44B	4.88B	4.25B	3.60B	2.98B	2.51B
EBITDA	3.50B	3.10B	2.18B	2.18B	1.77B	1.63B
Net Income	1.64B	1.46B	969.50M	1.11B	906.80M	818.80M
Balance Sheet
Total Assets	80.12B	64.26B	51.62B	38.36B	33.34B	22.33B
Cash, Cash Equivalents and Short-Term Investments	14.30B	14.99B	971.50M	738.40M	402.60M	664.60M
Total Debt	13.30B	13.49B	8.32B	6.42B	6.59B	4.87B
Total Liabilities	57.07B	44.08B	40.80B	29.17B	24.78B	16.10B
Stockholders Equity	23.02B	20.18B	10.78B	9.14B	8.51B	6.19B
Cash Flow
Free Cash Flow	1.97B	2.44B	1.84B	1.21B	1.58B	1.65B
Operating Cash Flow	2.12B	2.58B	2.03B	1.39B	1.70B	1.75B
Investing Cash Flow	-2.71B	-1.59B	-3.29B	-1.00B	-3.43B	-416.80M
Financing Cash Flow	14.43B	13.05B	2.87B	212.60M	2.68B	-505.10M

Arthur J Gallagher & Co Technical Analysis

Technical Analysis Sentiment

Negative

Last Price299.18

Price Trends

50DMA

302.55

Negative

100DMA

315.91

Negative

200DMA

312.14

Negative

Market Momentum

MACD

0.18

Negative

RSI

49.41

Neutral

STOCH

43.10

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AJG, the sentiment is Negative. The current price of 299.18 is above the 20-day moving average (MA) of 297.51, below the 50-day MA of 302.55, and below the 200-day MA of 312.14, indicating a neutral trend. The MACD of 0.18 indicates Negative momentum. The RSI at 49.41 is Neutral, neither overbought nor oversold. The STOCH value of 43.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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

Overall Rating

UnderperformOutperform

Sector (68)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AON	78 Outperform	$79.90B	31.02	37.99%	0.77%	18.42%	-4.44%
BRO	76 Outperform	$31.27B	27.33	11.27%	0.63%	11.68%	-0.17%
AJG	75 Outperform	$76.71B	45.10	9.49%	0.85%	15.03%	28.86%
ERIE	70 Outperform	$15.60B	28.25	31.14%	1.60%	12.19%	17.82%
Sector *	68 Neutral	$17.80B	11.87	10.23%	3.74%	9.69%	1.18%
MMC	67 Neutral	$100.16B	24.46	28.33%	1.64%	9.22%	3.05%
WTW	65 Neutral	$32.12B	230.11	1.57%	1.09%	1.27%	-84.75%

* Financial Sector Average

Performance Comparison

AJG

Arthur J Gallagher & Co

299.18

2.64

0.89%

AON

Aon

370.54

22.80

6.56%

BRO

Brown & Brown

94.79

-8.33

-8.08%

ERIE

Erie Indemnity Company

335.07

-161.53

-32.53%

MMC

Marsh & Mclennan Companies

203.74

-23.40

-10.30%

WTW

Willis Towers Watson

329.27

38.30

13.16%

Arthur J Gallagher & Co Corporate Events

Private Placements and FinancingM&A Transactions

Arthur J. Gallagher Completes Acquisition of AssuredPartners

Positive

Aug 18, 2025

On August 18, 2025, Arthur J. Gallagher & Co. completed its acquisition of AssuredPartners, a leading U.S. insurance broker. The transaction, valued at $13.8 billion, was financed through previously disclosed equity and debt financing transactions. This acquisition is expected to expand Gallagher’s retail middle-market property/casualty and employee benefits focus across the U.S., deepen capabilities in niche practice groups, and enhance its presence in the U.K. and Ireland. The integration aims to deliver significant value to clients and shareholders, with anticipated double-digit adjusted EPS accretion.

Financial Disclosures

Arthur J Gallagher & Co Q2 2025 Revenue Surge

Positive

Jul 31, 2025

On July 31, 2025, Arthur J. Gallagher & Co. announced its financial results for the second quarter ending June 30, 2025. The company reported an increase in brokerage revenue to $2,785.6 million from $2,376.3 million in the same quarter of the previous year, reflecting strong operational performance. The results indicate a positive trajectory for the company, potentially enhancing its market position and benefiting stakeholders.

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.Date of analysis: Sep 05, 2025