Arthur J. Gallagher & Co. (AJG) stock analysis

P/E above its 5-year median

Arthur J. Gallagher's P/E of 43.1 is above its own 5-year median of 42.9.

P/E above the industry

Arthur J. Gallagher's P/E of 43.1 is above the Insurance Agents, Brokers, and Service median of 30.1.

P/S above the industry

Arthur J. Gallagher's price-to-sales of 4.42 is above the Insurance Agents, Brokers, and Service median of 3.43.

P/B below the industry

Arthur J. Gallagher's price-to-book of 3.01 is below the Insurance Agents, Brokers, and Service median of 4.81.

Trading below fair value

The share price of $282.01 is below our fair value estimate of $330.34.

Margin of safety under 20%

The price is 14.6% below fair value, less than the 20% cushion we look for.

Revenue growing 10%+ a year

Revenue grew 17.7% a year over the last three fiscal years.

EPS growing under 10% a year

Diluted EPS grew 3.4% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew 6.0% over the last twelve months, against a 5-year average of 12.8% a year.

Growing faster than the industry

Revenue grew 25.6% over the last twelve months; the Insurance Agents, Brokers, and Service median is 13.8%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin trend

Banks and insurers do not report gross profit.

Return on equity under 15%

Return on equity was 7.2% over the last twelve months and averaged 10.2% over five years; we look for 15% on both.

Return on assets over 1%

Return on assets was 2.1%; for a bank or insurer, 1% or more is considered good.

Return on equity below the industry

Arthur J. Gallagher's return on equity of 7.2% is below the Insurance Agents, Brokers, and Service median of 9.3%.

Earnings grew over 5 years

Net income grew 12.8% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 10.4% over the last twelve months, against a 5-year average of 11.4%.

Net margin above the industry

Arthur J. Gallagher's net margin of 10.4% is above the Insurance Agents, Brokers, and Service median of 4.9%.

High debt

Debt is 53.0% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 70.2% five years ago to 53.0%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 24.0% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 1.05 times current liabilities.

Bankruptcy risk (Altman Z)

The Altman model does not apply to insurers.

Pays a dividend

Arthur J. Gallagher paid dividends worth 1.0% of the share price over the last twelve months.

Yield below Treasuries

The 1.0% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Arthur J. Gallagher yields 1.0%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 41.6% of net income.

Cash-flow cover

Needs dividends paid and free cash flow.