Arthur J Gallagher & Co (AJG) AI Stock Analysis

• Market Cap: $82.01B
• Dividend Yield: 0.77%
• Average Volume (3M): 1.61M
• Price to Earnings (P/E): 49.3
• Beta (1Y): 0.38
• Revenue Growth: 15.21%
• EPS Growth: 46.99%
• Country: US
• Employees: 56,000
• Sector: Financial
• Sector Strength: 88
• Industry: Insurance - Brokers
• EPS (TTM): 6.53
• Shares Outstanding: 255,734,800
• 10 Day Avg. Volume: 1,535,517
• 30 Day Avg. Volume: 1,605,777
• PEG Ratio: 1.05
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 0.78
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 6.54
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $343.18
• Price Target Upside: 8.04% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13

Arthur J Gallagher & Co demonstrates strong financial performance and strategic market positioning with robust revenue growth and profitability. The optimistic earnings call provides a positive outlook. However, technical indicators suggest potential short-term challenges, and the high P/E ratio raises valuation concerns. Overall, the stock presents a balanced profile with strengths in financial growth but warrants caution due to valuation and technical headwinds.

Positive Factors

Financial Growth

M&A activities are expected to grow AJG's EBITDA by over 40% in 2025, with additional upside from deal synergies.

Market Position

AJG's market share is estimated to be double that of its closest competitor, Marsh, indicating a strong position in the market.

Valuation

AJG's valuation is considered attractive, trading below its pre-Assured Partners multiple.

Negative Factors

Deal Uncertainty

Delays in closing the deal arguably increase the risk of AP employee attrition, and failure to close the deal would be a risk to above-consensus AJG revenue estimates.

Growth Challenges

There are underappreciated risks to AJ Gallagher's early 2025 organic growth trajectory from reinsurance pricing deceleration and historical seasonality favoring stronger second half growth.

Regulatory Risk

The announcement of a longer regulatory review period related to its acquisition of Assured Partners was surprising given AJG's SME market shares.

Arthur J Gallagher & Co Business Overview & Revenue Model

Company Description

Arthur 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 Money

Arthur J. Gallagher & Co. generates revenue primarily through commissions and fees earned from its brokerage and risk management services. The company acts as an intermediary between clients and insurance carriers, earning commissions on the insurance policies it places. Additionally, AJG provides consulting and advisory services that generate fees, offering strategic advice on risk management, benefits, and reinsurance. Partnerships with insurance carriers and expanding global markets also contribute to its earnings, allowing the company to leverage its extensive network and expertise to deliver value-added services to its clients.

Arthur J Gallagher & Co Financial Statement Overview

Summary

Arthur J Gallagher & Co shows a strong financial foundation with significant revenue growth and improved profitability margins. The low debt-to-equity ratio and robust ROE reflect financial stability, while positive cash flow dynamics enhance the company's financial position.

Income Statement

Arthur J Gallagher & Co has demonstrated strong revenue growth, with a 14.7% increase in Total Revenue from 2023 to 2024. The Gross Profit Margin for 2024 is approximately 84.8%, indicating effective cost management. The Net Profit Margin also improved to 12.7%, showcasing enhanced profitability. Consistent EBIT and EBITDA margins of 28.4% further highlight operational efficiency.

Balance Sheet

The company maintains a healthy financial position with a low Debt-to-Equity Ratio of approximately 0.03 in 2024, reflecting strong equity backing. The Return on Equity (ROE) is robust at 7.2%, indicating effective use of equity to generate profits. The Equity Ratio stands at 31.4%, suggesting a solid equity base relative to total assets, though there could be opportunities to optimize asset utilization.

Cash Flow

Arthur J Gallagher & Co exhibits positive cash flow dynamics, with Free Cash Flow growing by 32.8% from 2023 to 2024. The Operating Cash Flow to Net Income Ratio is 1.77, signaling strong cash generation relative to net income. Free Cash Flow to Net Income Ratio of 1.67 further emphasizes efficient cash flow conversion, although the company should monitor its capital expenditure trends.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
11.55B	10.07B	8.55B	8.21B	7.01B
	Gross Profit
9.80B	4.25B	3.60B	2.98B	2.51B
	EBIT
3.28B	1.86B	1.67B	1.34B	1.04B
	EBITDA
3.10B	2.18B	2.18B	1.77B	1.63B
	Net Income Common Stockholders
1.46B	969.50M	1.11B	906.80M	818.80M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
14.99B	971.50M	342.30M	402.60M	664.60M
	Total Assets
64.26B	51.62B	38.91B	33.34B	22.33B
	Total Debt
528.10M	8.32B	6.42B	6.59B	4.87B
	Net Debt
-14.46B	7.35B	6.07B	6.19B	4.20B
	Total Liabilities
44.08B	40.80B	29.72B	24.78B	16.10B
	Stockholders Equity
20.18B	10.78B	9.14B	8.51B	6.19B
Cash Flow		Free Cash Flow
2.44B	1.84B	1.94B	1.58B	1.65B
	Operating Cash Flow
2.58B	2.03B	2.13B	1.70B	1.75B
	Investing Cash Flow
-1.59B	-3.29B	-1.00B	-3.43B	-416.80M
	Financing Cash Flow
13.05B	2.87B	-522.80M	2.68B	-505.10M

Arthur J Gallagher & Co Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 317.64
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 317.64 is below the 20-day moving average (MA) of 326.25, below the 50-day MA of 330.22, and above the 200-day MA of 300.07, indicating a neutral trend. The MACD of -2.58 indicates Positive momentum. The RSI at 42.73 is Neutral, neither overbought nor oversold. The STOCH value of 23.69 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 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BRO	77 Outperform	$31.70B	30.83	16.18%	0.51%	12.57%	10.52%
AJG	76 Outperform	$82.01B	49.33	9.46%	0.77%	15.21%	46.99%
MMC	73 Outperform	$115.01B	28.51	30.51%	1.40%	7.56%	3.39%
ERIE	72 Outperform	$16.70B	30.76	32.38%	1.45%	15.05%	26.80%
AON	69 Neutral	$76.61B	30.23	74.17%	0.76%	19.57%	-8.09%
WTW	65 Neutral	$30.38B	―	-0.60%	1.16%	2.42%	-103.64%
Sector *	63 Neutral	$12.46B	9.56	8.14%	17044.64%	12.63%	-4.25%

Arthur J Gallagher & Co Corporate Events

Arthur J. Gallagher Reports Strong Q1 2025 Results

On May 1, 2025, Arthur J. Gallagher & Co. announced its financial results for the first quarter of 2025, reporting significant growth in brokerage revenues and net earnings compared to the previous year. The company’s performance highlights its strong market position and effective management strategies, which are likely to positively impact stakeholders and reinforce its competitive standing in the industry.

Spark’s Take on AJG Stock

According to Spark, TipRanks’ AI Analyst, AJG is a Outperform.

Arthur J Gallagher & Co scores well in financial performance due to strong revenue growth and profitability, as well as effective cash flow management. The recent earnings call provided an optimistic outlook, bolstered by a strategic acquisition strategy. However, technical indicators suggest potential short-term challenges, and the high P/E ratio raises valuation concerns. Overall, the stock presents a balanced profile with strengths in financial growth and strategic market positioning, but caution is warranted due to valuation and technical headwinds.

To see Spark’s full report on AJG stock, click here.

Arthur J. Gallagher & Co. Plans Investor Meeting

On March 5, 2025, Arthur J. Gallagher & Co. announced plans to host an investor meeting on March 20, 2025, with a webcast and presentation materials available on their investor relations page. The CFO Commentary includes estimates for 2025 results and net after-tax cash flows from clean energy investments, highlighting the company’s focus on future financial performance and sustainability initiatives.