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Fundamental analysis: Arthur J. Gallagher & Co. (AJG)

Awarener score: 6.0

Conclusion

The higher the Awarener score, the more bang you get for the buck. It measures how much genuine funds the company generates for the stock price paid (Average), the business stability (Excellent) and growth (Lacking), and the company's inclination to return cash to the stockholders (Modest).

Note: All scores range from 1 (worst) to 10 (best). Conclusions are updated daily with closing stock prices and new reported quarterly financial statements.

Revenue score: 6.5

  • Business has been slightly shrinking. It's been below average when measured against peer companies.
  • Arthur J. Gallagher & Co. business trend stability is excellent. The higher the stability, the lower the risk. It looks slightly better than rivals.

Margins score: 7.3

  • AJG profit margins -on goods and services sold- are usually hardly sufficient. They stand slightly worse than rival companies.
  • Business profit on sales tends to be very good. It's similar to competitors.
  • Profits on sales made -available to repay debt and purchase properties- are usually good. They remain rather normal in relation to peers.
  • Earnings -before income taxes and interests on loans taken- tend to be very good in relation to total revenues. They're still slightly worse than similar companies.
  • Profits -before income taxes- are usually very good considering total sales, and remain almost average when measured against rivals.
  • Total net profit tends to be very good when confronted to sales. Company stands below average when measured against comparable firms.

Growth score: 6.1

  • Arthur J. Gallagher & Co. profit -on goods and services sold- has been growing at a normal pace. It's been lacking compared to competitors.
  • In recent years, earnings -on operations- have been growing at a normal step, which has been somewhat better than comparable firms.
  • Profits -available to repay debt and purchase properties- have been growing at a good pace, which compares great when measured against peer enterprises.
  • Earnings -before income taxes and interests on loans taken- have been growing at a very good tempo. It turns to be excellent in relation to similar stocks.
  • In past years, profits -before income taxes- grew at a good speed. It was well ranked against rivals.
  • In the previous years, growth on total net profit has been low, and almost average when measured against peer companies.
  • Earnings per share have grown at a very low rhythm in past years. It's been in a weak position compared to industry peers.

Miscellaneous score: 9.0

  • AJG managed to pay no income taxes on profits made in the past years, sometimes even got a credit. It's been better than most peers.
  • The company does not report R&D expenses. It's meaningless to measure in relation to competitors.
  • We have insufficient data to estimate how effective is research and development effort. It stands unknown against rival companies.

Profitability score: 7.2

  • Arthur J. Gallagher & Co. usually gets good returns on the resources it controls. It proves weak when measured against peer firms.
  • The company normally gets good proceeds -on the resources directly invested in the business-. They remain lacking compared to similar companies.
  • There's usually abundant profitability -in relation to owned resources-. It ranks similar to competitors.
  • In the past, got good returns -on the tangible resources it controls-. This metric is usually related to the industry in which operates and combines profitability versus reinvestment needs. It's weak when measured against comparable enterprises.

Usage of Funds score: 5.3

  • AJG usually uses a slight portion of genuine funds generated to buy or replace property, plant, or equipment. The need for reinvestments is light. It stands weak when measured against rival firms.
  • The company is usually sparsely replacing property, plant, and equipment that gets old, instead using funds in something else. It can't keep forever, which is substantially worse when measured against industry peers.
  • In the past twelve months it paid low dividends, considering the current stock price. It came somewhat worse than competitors.
  • Dividend payments have been more or less stable in recent years. The company has behaved lacking compared to similar firms.
  • Dividend payments usually represent a modest portion of genuine funds generation and should be reasonable safe. Sustainability looks somewhat worse than comparable companies.
  • The company usually enlarges quite a bit the pool of investors, resulting in more mouths feeding on the pie of profits. It remains in a weak position compared to peer enterprises.
  • Repurchase effectiveness metric is very complex. Run again in analytical mode if you're interested in a technical explanation. It stands rather normal in relation to rivals.
  • We do not have sufficient data to comment on buybacks and their sustainability. It still looks dubious against competitors.

Balance Sheet score: 3.8

  • Arthur J. Gallagher & Co. intangible assets (like brands and goodwill) represent a very large portion of resources controlled, according to accounting books. There could be major difficulties in liquidating them if the company ever gets in financial distress. It happens to be weak when measured against peer companies.
  • The company has somewhat lower short-term resources than short-term obligations. Unless it's part of the business model, there might some liquidity concerns. It turns to be in a very weak position compared to similar firms.
  • Roughly a tenth of resources controlled were provided for with financial debt. Creditors have minor claims on the company, and financial position is safe. It remains somewhat better than rival firms.
  • Controlled resources might be turned into cash and equivalents neither fast nor too slow. Liquidity and risk might be run-of-the-mill. It looks almost average when measured against rivals.
  • For every dollar of short-term obligations, the company has few cents of cash and short-term receivables. It's a disappointment compared to peer firms.
  • For every dollar of short-term obligations, the company has extremely few cents of cash and equivalents, which is bottom tier against similar enterprises.
  • Usually, sales are on somewhat more than three months credit. It still ranks weak when measured against peers.
  • Normally has no inventories. It comes up as impressive in relation to competitors.
  • On average, it takes higher than five months from the purchase to charging customers. It happens to be mediocre against peers.
  • Pays suppliers mostly in cash. It ranks last-in-rank when measured against industry peers.
  • The company pays its suppliers six months or more before charging its customers, so there's abundant money invested in working capital. It's a disappointment compared to similar companies.
  • Net interest expenses consume a portion of usual business earnings, but are bearable. It stands slightly worse than rival firms.
  • Business earnings have usually been reasonable when measured against loans taken. Cutting back reinvesting in the business, it could take more than five years to repay the obligations with current profitability. It ranks almost average when measured against comparable enterprises.
  • Revenues are very good in relation to property, plant, and equipment required to operate. This metric is likely dependent on the industry the company operates in. Low property, plant, and equipment requirements allows the company to keep more money to reward stockholders in the long run. It looks close to average when compared to similar firms.
  • Resource exploitation is low when yearly sales are considered, business volume must be significantly increased. This metric is normally tied to the industry where the firm belongs. It's still bottom tier against peer companies.

Valuation score: 4.4

  • Arthur J. Gallagher & Co. looks heavily expensive in relation to profits and financial position. It happens to be weak when measured against competitors.
  • Price-to-Tangible-Book-Value is a fairly complex metric. Run again in analytical mode if you're interested in a technical explanation. It remains a disappointment compared to peers.
  • In the past twelve months, the company generated some free funds in relation to the stock price, which stands slightly better than similar companies.
  • The company usually generates reasonably more than enough genuine funds to cover up for its business needs. Surplus cash may be used to repay loans, to eventually buy new businesses, or to reward investors. Considering the financial position and stock price, the current valuation might be fair. It's still encouraging in relation to industry firms.
  • In the past twelve months, the company has slightly enlarged the pool of investors by issuing new shares. The pie of earnings will now be split among a little more stockholders. It came up in a weak position compared to peer ventures.
  • The company has barely more debt than cash. It may borrow extra money if it wishes so, or start cumulating cash for future uses. It looks somewhat better than similar enterprises.
  • Considering the past twelve months, traditional Price-to-Earnings relation is very high. A lot of improvement expectations are already in the stock price, which is risky. It ranks weak when measured against peer companies.
  • Comparing the current stock price with the past twelve-months revenues gives a very high relationship. This is an important metric to check its evolution through time, and to compare to industry peers. It looks in a very weak position compared to rival firms.
  • The relation between the stock price and accounting book value is really high, which may be good or bad depending on context. Run again in analytic mode if you want to dig deeper. The company remains somewhat worse than peer firms.
  • In the past twelve months, the operating business earned little money when compared to the current stock price and financial position. It happens to be almost average when measured against industry peers.
  • In an alternate metric of bang for the buck, the company has usually shown a modest earnings power ability when measured against the current stock price and financial position. It's still in a weak position compared to peer companies.

Total score: 6.2


AJG logos

Company at a glance: Arthur J. Gallagher & Co. (AJG)

Sector, industry: Financial Services, Insurance Brokers

Market Cap: 45.35 billions

Revenues TTM: 8.82 billions

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.

Awarener score: 6.0

Conclusion

The higher the Awarener score, the more bang you get for the buck. It measures how much genuine funds the company generates for the stock price paid (Average), the business stability (Excellent) and growth (Lacking), and the company's inclination to return cash to the stockholders (Modest).