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Brown & Brown (BRO) Up 35% in a Year: More Upside Left?

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Shares of Brown & Brown Inc. (BRO - Free Report) have rallied 34.9% in a year, outperforming the industry’s and the Finance sector’s increase of 13.5% and 2.8%, respectively. The S&P 500 composite index has risen 8.6% in the said time frame. With a market capitalization of $17.8 billion, the average volume of shares traded in the last three months was about 1.8 billion.

Strong performing segments, strategic buyouts to capitalize on growing markets opportunities, sturdy financial standing and effective capital deployment continue to drive BRO. This insurance broker’s total shareholder return has outperformed both its peer group and the S&P 500 in the last five years.

Being one of the largest insurance brokers, this Zacks Rank #3 (Hold) company has a solid track record of beating estimates in the last nine quarters.

Zacks Investment Research
Image Source: Zacks Investment Research

Can BRO Retain the Momentum?

The Zacks Consensus Estimate for Brown & Brown’s 2022 earnings is pegged at $2.32, indicating a 5.9% increase from the year-ago reported figure on 9.2% higher revenues of $3.3 billion. The consensus estimate for 2023 earnings stands at $2.54, indicating a 9.1% increase from the year-ago reported figure on 8.2% higher revenues of $3.6 billion. BRO has a Growth Score of B.

The consensus estimate for 2022 has moved north by 2.2% while that for 2023 has moved up 3.3% in the past 60 days, reflecting analysts’ optimism.

Increasing commissions and fees across its segments continue to drive the top line for Brown and Brown that witnessed a five-year annual growth rate of 11.6%. Improving new business, solid retention and continued rate increases for most lines of coverage should help retain the growth momentum.

Brown & Brown has an impressive inorganic story that helps strengthen compelling products and service portfolio as well as expand its global reach.

A solid capital position by virtue of sustained strong operational performance continues to aid BRO to make consistent investments in boosting organic growth and margin expansion.

Brown & Brown has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.

Solid Dividend History

Banking on strong capital and liquidity position, Brown & Brown has increased dividends in the last 28 years at a five-year CAGR of 8.7% and currently yields is 0.6%.

Stocks to Consider

Some better-ranked insurers include Horace Mann Educators Corporation (HMN - Free Report) , Aegon (AEG - Free Report) and CNO Financial Group (CNO - Free Report) . While Horace Mann sports a Zacks Rank #1 (Strong Buy), Aegon and CNO Financial each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Horace Mann’s earnings surpassed estimates in each of the last four quarters, the average beat being 22.8%. In the past year, Horace Mann has declined 6.5%.

The Zacks Consensus Estimate for HMN’s 2022 and 2023 earnings has moved 8.3% and 11% north, respectively, in the past 60 days.

Aegon’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 75%. In the past year, Aegon has declined 12.6%.

The Zacks Consensus Estimate for AEG’s 2023 earnings has moved 13.9% north, respectively, in the past 60 days.

The bottom line of CNO Financial surpassed earnings estimates in each of the last four quarters, the average being 25.48%. In the past year, CNO Financial has declined 11%.

The Zacks Consensus Estimate for CNO’s 2022 and 2023 earnings has moved 0.4% and 0.3% north, respectively, in the past seven days.

 

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