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Why You Should Consider Buying Brown & Brown (BRO) Stock
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Brown & Brown’s (BRO - Free Report) new businesses, better customer retention, premium-rate increases across the majority of business lines, strategic acquisitions and a strong financial position makes it worth adding to one’s portfolio.
BRO has a decent history of delivering earnings surprises in the last four reported quarters. Earnings of the insurer increased 16.8% in the last five years, better than the industry average of 12.6%.
BRO’s total shareholder return has outperformed its peer group and the S&P 500 in the last five years. The 10-year average total shareholders' return was 399%.
Zacks Rank and Price Performance
Brown & Brown carries a Zacks Rank #2 (Buy) currently. The company’s shares have gained 20.6% year to date compared with the industry’s growth of 11.2%. The Finance sector has risen 4.1% in the same period and the Zacks S&P 500 composite increased 16.9%.
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Optimistic Growth Projections
The Zacks Consensus Estimate for 2023 earnings is pegged at $2.52, suggesting a year-over-year increase of 10.5% on 13.2% higher revenues of $4.1 billion. The consensus estimate for 2024 earnings is pegged at $2.75, indicating a year-over-year increase of 9.2% on 6.1% higher revenues of $4.3 billion.
Growth Drivers
Brown and Brown’s commissions and fees should continue to benefit from increasing new business, strong retention and continued rate increases for most lines of coverage. This, in turn, should drive the top line. The top line witnessed a five-year annual growth rate of 14%.
The insurance broker intends to make consistent investments in boosting organic growth and margin expansion.
Brown & Brown boasts an impressive inorganic story that helps strengthen its compelling products and service portfolio, expands global reach and accelerates growth rate. Strategic buyouts also help BRO to capitalize on growing market opportunities.
Backed by a sustained operational performance, Brown & Brown maintained a strong liquidity position. BRO has strong cash conversion due to the strength of operating model and diversity of businesses.
Impressive Dividend History
A solid capital position supported BRO in increasing dividends over the last 29 years. It increased at a five-year (2019-2023) CAGR of 6.57%, making it an attractive pick for yield-seeking investors.
The Zacks Consensus Estimate for MMC’s 2023 and 2024 earnings indicates a 10.8% and 9.1% year-over-year increase, respectively. Year to date, the insurer has gained 12%. It delivered a four-quarter average earnings surprise of 2.90%.
RYAN delivered a four-quarter average earnings surprise of 2.67%. Year to date, the insurer has gained 7.1%. The Zacks Consensus Estimate for Ryan Specialty’s 2023 and 2024 EPS indicates a respective 15.7% and 23.3% increase year over year.
eHealth delivered a four-quarter average earnings surprise of 29.39%. Year to date, the insurer has gained 74.6%. The Zacks Consensus Estimate for EHTH’s 2023 and 2024 earnings indicates a respective year-over-year increase of 64% and 30.3%.
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Why You Should Consider Buying Brown & Brown (BRO) Stock
Brown & Brown’s (BRO - Free Report) new businesses, better customer retention, premium-rate increases across the majority of business lines, strategic acquisitions and a strong financial position makes it worth adding to one’s portfolio.
BRO has a decent history of delivering earnings surprises in the last four reported quarters. Earnings of the insurer increased 16.8% in the last five years, better than the industry average of 12.6%.
BRO’s total shareholder return has outperformed its peer group and the S&P 500 in the last five years. The 10-year average total shareholders' return was 399%.
Zacks Rank and Price Performance
Brown & Brown carries a Zacks Rank #2 (Buy) currently. The company’s shares have gained 20.6% year to date compared with the industry’s growth of 11.2%. The Finance sector has risen 4.1% in the same period and the Zacks S&P 500 composite increased 16.9%.
Image Source: Zacks Investment Research
Optimistic Growth Projections
The Zacks Consensus Estimate for 2023 earnings is pegged at $2.52, suggesting a year-over-year increase of 10.5% on 13.2% higher revenues of $4.1 billion. The consensus estimate for 2024 earnings is pegged at $2.75, indicating a year-over-year increase of 9.2% on 6.1% higher revenues of $4.3 billion.
Growth Drivers
Brown and Brown’s commissions and fees should continue to benefit from increasing new business, strong retention and continued rate increases for most lines of coverage. This, in turn, should drive the top line. The top line witnessed a five-year annual growth rate of 14%.
The insurance broker intends to make consistent investments in boosting organic growth and margin expansion.
Brown & Brown boasts an impressive inorganic story that helps strengthen its compelling products and service portfolio, expands global reach and accelerates growth rate. Strategic buyouts also help BRO to capitalize on growing market opportunities.
Backed by a sustained operational performance, Brown & Brown maintained a strong liquidity position. BRO has strong cash conversion due to the strength of operating model and diversity of businesses.
Impressive Dividend History
A solid capital position supported BRO in increasing dividends over the last 29 years. It increased at a five-year (2019-2023) CAGR of 6.57%, making it an attractive pick for yield-seeking investors.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are Marsh & McLennan Companies (MMC - Free Report) , Ryan Specialty Group Holdings (RYAN - Free Report) and eHealth (EHTH - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for MMC’s 2023 and 2024 earnings indicates a 10.8% and 9.1% year-over-year increase, respectively. Year to date, the insurer has gained 12%. It delivered a four-quarter average earnings surprise of 2.90%.
RYAN delivered a four-quarter average earnings surprise of 2.67%. Year to date, the insurer has gained 7.1%. The Zacks Consensus Estimate for Ryan Specialty’s 2023 and 2024 EPS indicates a respective 15.7% and 23.3% increase year over year.
eHealth delivered a four-quarter average earnings surprise of 29.39%. Year to date, the insurer has gained 74.6%. The Zacks Consensus Estimate for EHTH’s 2023 and 2024 earnings indicates a respective year-over-year increase of 64% and 30.3%.