Arthur J. Gallagher & Co. Reports Mixed Earnings Amid Mixed Market Performance
Valued at a market cap of $66.8 billion, Arthur J. Gallagher & Co. (AJG) specializes in insurance and reinsurance brokerage, as well as consulting, third-party property/casualty claims settlement, and administration services. Based in Rolling Meadows, Illinois, the company also offers a variety of risk management services and helps clients manage employee health, welfare, and retirement plans.
Over the past 52 weeks, AJG shares have struggled compared to the overall market. Specifically, the stock has risen 21.1%, while the S&P 500 Index ($SPX) surged by 31.3%. Despite this, AJG’s share price has jumped nearly 36.3% year-to-date, surpassing SPX’s gain of 25.5%.
When focusing on sector performance, AJG has fallen behind the Financial Select Sector SPDR Fund (XLF), which recorded a 44.3% increase over the same period. However, AJG outperformed XLF’s year-to-date return of 35.8%.
After releasing mixed Q3 earnings on October 24, AJG shares dipped 1.6%. The company reported adjusted earnings of $2.26 per share, reflecting a 13% increase year-over-year and matching analysts’ expectations. However, adjusted revenue rose 11.1% to $2.74 billion, slightly below Wall Street’s forecast of $2.75 billion, primarily due to weaker performance in its risk management segment.
Looking ahead to the fiscal year ending in December, analysts predict a 15.5% increase in AJG’s EPS to $10.12. The company’s track record shows it has either met or surpassed consensus earnings estimates in each of the last four quarters.
Currently, among the 20 analysts who cover AJG, the consensus rating is deemed a “Moderate Buy.” This is based on 10 “Strong Buy,” one “Moderate Buy,” seven “Hold,” and two “Moderate Sell” ratings. Notably, this configuration has become more optimistic compared to three months ago, with nine analysts now recommending a “Strong Buy.”
On November 12, BMO Capital maintained its “Outperform” rating for AJG and raised its price target to $325, marking the highest target on the Street. This implies a modest potential upside of 6.1% from current trading levels.
As of now, AJG is trading above its mean price target of $297.06.
On the date of publication, Neharika Jain did not hold any positions, directly or indirectly, in any of the securities mentioned in this article. All information and data herein are for informational purposes only. For full disclosure, please see the Barchart Disclosure Policy.
The views expressed in this article reflect those of the author and do not necessarily represent those of Nasdaq, Inc.
