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Arthur J. Gallagher (AJG) Q4 Earnings Top, Revenues Miss
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Arthur J. Gallagher & Co. (AJG - Free Report) reported fourth-quarter 2020 adjusted net earnings of 88 cents per share, which beat the Zacks Consensus Estimate by 14.3%. Moreover, the bottom line increased about 51.7% on a year-over-year basis.
The company’s performance was driven by lower expenses, higher adjusted revenues, and strong margin expansion across Brokerage as well as Risk Management segments.
Operational Update
Total revenues were $1.7 billion, down 1.2% year over year, primarily due to higher commissions, fees, and supplemental and contingent revenues. Moreover, the top line missed the Zacks Consensus Estimate by 0.2%.
Arthur J. Gallagher’s total expense decreased 4.1% year over year to $1.6 billion, attributed to lower compensation.
Adjusted earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) grew 26.4% from the prior-year quarter to $368 million.
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and Brown & Brown (BRO - Free Report) beat earnings estimates.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Arthur J. Gallagher (AJG) Q4 Earnings Top, Revenues Miss
Arthur J. Gallagher & Co. (AJG - Free Report) reported fourth-quarter 2020 adjusted net earnings of 88 cents per share, which beat the Zacks Consensus Estimate by 14.3%. Moreover, the bottom line increased about 51.7% on a year-over-year basis.
The company’s performance was driven by lower expenses, higher adjusted revenues, and strong margin expansion across Brokerage as well as Risk Management segments.
Operational Update
Total revenues were $1.7 billion, down 1.2% year over year, primarily due to higher commissions, fees, and supplemental and contingent revenues. Moreover, the top line missed the Zacks Consensus Estimate by 0.2%.
Arthur J. Gallagher’s total expense decreased 4.1% year over year to $1.6 billion, attributed to lower compensation.
Adjusted earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) grew 26.4% from the prior-year quarter to $368 million.
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
Arthur J. Gallagher & Co. price-consensus-eps-surprise-chart | Arthur J. Gallagher & Co. Quote
Segment Results
Brokerage: Adjusted revenues of $1.2 billion increased 4.5% year over year on higher commissions, fees, and supplemental and contingent revenues.
Adjusted EBITDAC climbed 29.6% from the prior-year quarter to $373 million while margin expanded 580 basis points (bps) to 29.9%.
Risk Management: Adjusted revenues were down 0.1% year over year to $216.4 million.
Adjusted EBITDAC increased 11.3% year over year to $41.4 million while margin expanded 190 bps to 19.1%.
Corporate: EBITDAC was negative $46.4 million compared with negative $33.9 million in the year-ago quarter.
Financial Update
As of Dec 31, 2020, total assets were $22.3 billion, up 13.7% from the 2019-end level.
Cash and cash equivalents at year-end increased 36.2% from the 2019 level to $3.6 billion.
Shareholders’ equity increased 19.5% from Dec 31, 2019 to $6.2 billion as of Dec 31, 2020.
Acquisition Update
In 2020, the company closed 27 acquisitions, with estimated annualized revenues of $251.4 million.
Zacks Rank
Currently, Arthur J. Gallagher carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players that have reported fourth-quarter results so far, The Travelers Companies (TRV - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and Brown & Brown (BRO - Free Report) beat earnings estimates.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>