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These 3 Insurance Stocks are Crushing the Market (BRO, PGR, AJG)
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It has been a rather wild few weeks in the market, with the broad stock indexes experiencing the sharpest correction so far this year. Although stocks have bounced back aggressively following last week’s sell off, there is still some uncertainty on the horizon.
Amidst this volatility, one sector has stood out and shown considerable resilience even after outperforming all year. Insurance stocks held up exceptionally well during the sell-off and continue to lead the market higher today. Additionally, the Insurance Brokerage industry currently sits in the top 4% of the Zacks Industry Rank.
Progressive ((PGR - Free Report) ), Brown and Brown ((BRO - Free Report) ) and Arthur J. Gallagher and Co. ((AJG - Free Report) ) have been industry and market leading stocks all year and boast top Zacks Ranks. They have also put up impressive long-term stock performances and enjoy very secure business models. Insurance companies are high margin businesses and provide a service that will be needed regardless of the economic environment.
Image Source: Zacks Investment Research
The Progressive: One of the Best Stocks in the Market
The Progressive has been a standout stock in the market leading insurance sector, delivering exceptional performance both in the short term and over the long haul. With a strong growth outlook, a top Zacks Rank, and a discounted valuation, Progressive stock is well-positioned to continue its impressive run.
This robust performance is not a recent phenomenon; Progressive has consistently delivered outstanding returns over the long term. Over the past 15 years, the stock has compounded at an annual rate of 18.8%, nearly 13xing investors' money during that period.
Progressive's impressive business performance is reflected in its Zacks Rank #2 (Buy) rating. The company's earnings estimates have seen steady upward revisions over the past year, with analysts unanimously raising their forecasts across timeframes.
Progressive currently has a forward earnings multiple of 18.6x, which is below the market average and above its 10-year median 17.1x. However, it should be noted that PGR is expected to grow its earnings per share (EPS) at an impressive pace in the coming years giving it a valuation that is cheap relative to growth.
EPS are forecast to grow 23.8% annually over the next three to five years giving PGR a PEG ratio of 0.78, which is a discount based on the metric.
Image Source: Zacks Investment Research
Brown and Brown: An Incredible Long-Term Performance
Brown and Brown is a leading insurance brokerage firm that was founded in 1939. Its incredible long-term stock performance has been bolstered by steady and consistent growth along with conservative management, which is expected to continue.
Since 1995, Brown and Brown has compounded at a annual rate of 17%, nearly double the market average and more than 100xing investors money over that time. We can see that the other stocks shared here have also posted tremendous returns over that time, but not better than BRO.
Brown and Brown also enjoys a Zacks Rank #2 (Buy) rating, reflecting upward trending earnings revisions. Sales growth this year and next year are expected to increase 10% and 7% respectively and EPS are forecast to grow 30.6% this year and 8.5% next year.
Today, Brown and Brown has a forward earnings multiple of 27.2x, which is above the market average and above its 10-year median of 24.5x.
Image Source: Zacks Investment Research
Arthur J. Gallagher and Co.: Steady Growth Benefits Shares
Although Arthur J. Gallager and Co. has the lowest returns this year and over the long run, it is still a very respectable company, and the stock has bullish catalysts on the horizon. AJG is the world’s largest property/casualty third-party claims administrator and ranks the world’s fourth largest globally among insurance brokers based on revenues.
In addition to a Zacks Rank #1 (Strong Buy) rating and steady growth estimates the company has dramatically grown its cash pile, providing management considerable optionality.
At the most recent quarterly report AJG shared that its cash position had grown 45% year-over-year (YoY) to $1.4 billion. With this, shareholders can expect the company to return cash in the form of dividends or buybacks, or make another acquisition.
Today, Arthur J. Gallager and Co. is trading at a one year forward earnings multiple of 27.8x, which is above the market average and above its 10-year median of 21.7x. The company has a 0.85% dividend yield and has raised the dividend by an average of 7% annually over the last five years.
Image Source: Zacks Investment Research
Final Thoughts
I have been very surprised by the impressive returns of the insurance industry this year, and based on the recent price action, would expect this strong performance into the year end. Each of these stocks displays relative strength versus the broad market and are all bumping up against their recent highs, indicating a breakout may be imminent.
Not only do The Progressive, Arthur J. Gallagher and Co. and Brown and Brown boast strong earnings revisions trends and relative strength, but their stocks have appreciated with very low volatility as well. Remarkably steady long-term returns and near-term catalysts make these stocks worthy considerations for any investor’s portfolio.
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These 3 Insurance Stocks are Crushing the Market (BRO, PGR, AJG)
It has been a rather wild few weeks in the market, with the broad stock indexes experiencing the sharpest correction so far this year. Although stocks have bounced back aggressively following last week’s sell off, there is still some uncertainty on the horizon.
Amidst this volatility, one sector has stood out and shown considerable resilience even after outperforming all year. Insurance stocks held up exceptionally well during the sell-off and continue to lead the market higher today. Additionally, the Insurance Brokerage industry currently sits in the top 4% of the Zacks Industry Rank.
Progressive ((PGR - Free Report) ), Brown and Brown ((BRO - Free Report) ) and Arthur J. Gallagher and Co. ((AJG - Free Report) ) have been industry and market leading stocks all year and boast top Zacks Ranks. They have also put up impressive long-term stock performances and enjoy very secure business models. Insurance companies are high margin businesses and provide a service that will be needed regardless of the economic environment.
Image Source: Zacks Investment Research
The Progressive: One of the Best Stocks in the Market
The Progressive has been a standout stock in the market leading insurance sector, delivering exceptional performance both in the short term and over the long haul. With a strong growth outlook, a top Zacks Rank, and a discounted valuation, Progressive stock is well-positioned to continue its impressive run.
This robust performance is not a recent phenomenon; Progressive has consistently delivered outstanding returns over the long term. Over the past 15 years, the stock has compounded at an annual rate of 18.8%, nearly 13xing investors' money during that period.
Progressive's impressive business performance is reflected in its Zacks Rank #2 (Buy) rating. The company's earnings estimates have seen steady upward revisions over the past year, with analysts unanimously raising their forecasts across timeframes.
Progressive currently has a forward earnings multiple of 18.6x, which is below the market average and above its 10-year median 17.1x. However, it should be noted that PGR is expected to grow its earnings per share (EPS) at an impressive pace in the coming years giving it a valuation that is cheap relative to growth.
EPS are forecast to grow 23.8% annually over the next three to five years giving PGR a PEG ratio of 0.78, which is a discount based on the metric.
Image Source: Zacks Investment Research
Brown and Brown: An Incredible Long-Term Performance
Brown and Brown is a leading insurance brokerage firm that was founded in 1939. Its incredible long-term stock performance has been bolstered by steady and consistent growth along with conservative management, which is expected to continue.
Since 1995, Brown and Brown has compounded at a annual rate of 17%, nearly double the market average and more than 100xing investors money over that time. We can see that the other stocks shared here have also posted tremendous returns over that time, but not better than BRO.
Brown and Brown also enjoys a Zacks Rank #2 (Buy) rating, reflecting upward trending earnings revisions. Sales growth this year and next year are expected to increase 10% and 7% respectively and EPS are forecast to grow 30.6% this year and 8.5% next year.
Today, Brown and Brown has a forward earnings multiple of 27.2x, which is above the market average and above its 10-year median of 24.5x.
Image Source: Zacks Investment Research
Arthur J. Gallagher and Co.: Steady Growth Benefits Shares
Although Arthur J. Gallager and Co. has the lowest returns this year and over the long run, it is still a very respectable company, and the stock has bullish catalysts on the horizon. AJG is the world’s largest property/casualty third-party claims administrator and ranks the world’s fourth largest globally among insurance brokers based on revenues.
In addition to a Zacks Rank #1 (Strong Buy) rating and steady growth estimates the company has dramatically grown its cash pile, providing management considerable optionality.
At the most recent quarterly report AJG shared that its cash position had grown 45% year-over-year (YoY) to $1.4 billion. With this, shareholders can expect the company to return cash in the form of dividends or buybacks, or make another acquisition.
Today, Arthur J. Gallager and Co. is trading at a one year forward earnings multiple of 27.8x, which is above the market average and above its 10-year median of 21.7x. The company has a 0.85% dividend yield and has raised the dividend by an average of 7% annually over the last five years.
Image Source: Zacks Investment Research
Final Thoughts
I have been very surprised by the impressive returns of the insurance industry this year, and based on the recent price action, would expect this strong performance into the year end. Each of these stocks displays relative strength versus the broad market and are all bumping up against their recent highs, indicating a breakout may be imminent.
Not only do The Progressive, Arthur J. Gallagher and Co. and Brown and Brown boast strong earnings revisions trends and relative strength, but their stocks have appreciated with very low volatility as well. Remarkably steady long-term returns and near-term catalysts make these stocks worthy considerations for any investor’s portfolio.