Morningstar

Arthur J. Gallagher & Co AJG

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Stock XNYS Rating as of
$251.97 −1.94 (0.76%)
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As of Cboe BZX Real-Time Price Open

Company Report

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Weaker Insurance Pricing Could Become a Headwind for Gallagher

Brett Horn

Arthur J. Gallagher is somewhat of a tollbooth business. The company has a narrow moat due to sticky customer relationships, and its revenue is driven by insurance transactions, which are generally stable as most insurance purchases are nondiscretionary. Since its fees are often set as a percentage of premium levels, it does have exposure to the insurance pricing cycle, but revenue for the business is still fairly steady. The company’s cost structure is flexible, and capital needs are minimal. The net result is relatively healthy and stable free cash flow.

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Price vs Fair Value

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AJG is trading at a LOCK|>rq#vB premium.
Price
$253.83
Fair Value
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Uncertainty
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1-Star Price
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5-Star Price
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Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

The stability of its brokerage operations makes Gallagher a relatively steady producer of free cash flow.

Bears

Gallagher's established position in a relatively mature market lowers its long-term organic growth prospects.

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News

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Trading Information

Previous Close Price
$253.83
Day Range
$248.01–254.67
52-Week Range
$190.76–316.67
Bid/Ask
$251.74 / $252.12
Shares Outstanding
256.94M
Market Cap
$64.60B
Volume/Avg
509,345 / 2M

Key Statistics

Price/Earnings (Normalized)
22.07
Price/Sales
4.41
Dividend Yield (Trailing)
1.06%
Dividend Yield (Forward)
1.10%
Total Yield
1.20%

Company Profile

Founded in 1927 as a one-person agency, Gallagher’s primary business is insurance brokerage, with a focus on serving middle-market companies. The company’s risk management segment provides third-party claims adjustment to companies that choose to self-insure. Gallagher has about 72,000 employees and generates about a third of its revenue internationally, primarily in Australia, Canada, New Zealand, and the UK.
Sector
Financial Services
Industry
Insurance Brokers
Stock Style Box
Mid Core
Total Number of Employees
72,000
Website
https://www.ajg.com

Competitors

Valuation

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Metric
AJG
MRSH
Price/Earnings (Normalized)
 22.0717.84
Price/Book Value
 2.745.89
Price/Sales
 4.413.18
Price/Cash Flow
 24.8015.50
Price/Earnings
AJG
MRSH

Financial Strength

Metric
AJG
MRSH
Quick Ratio
 0.190.48
Current Ratio
 1.061.11
Interest Coverage
 4.206.50
Quick Ratio
AJG
MRSH

Profitability

Metric
AJG
MRSH
Return on Assets (Normalized)
 3.92%7.47%
Return on Equity (Normalized)
 12.96%29.17%
Return on Invested Capital (Normalized)
 9.57%13.64%
Return on Assets
AJG
MRSH

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