AJG Arthur J. Gallagher & Co. - Fundamental Analysis
NEUTRAL
AJG Stock | Fundamental Analysis & Investment Insights
NYSE
•
Financial Services
•
Insurance Brokers
Current Price
$258.51
Analyst Target
$319.8
+23.7% Upside
52W High
$351.23
52W Low
$239.47
AI Analysis
Powered by advanced machine learning algorithms
Confidence Score
65%
Analysis Accuracy
Arthur J. Gallagher & Co. (AJG) trades at a significant premium to peers on a P/E basis (41.3x vs sector avg 22x), despite solid long-term revenue growth (20% YoY) and industry-leading brokerage positioning. However, near-term earnings contraction (-25.2% YoY), weakening quarterly EPS trends, and negative insider activity (over $13.6M in officer sales) counterbalance strong historical profitability and cash flow generation. Price performance has been weak over the past year (-11.6%) and six months (-24.1%), underperforming key peers like TRV and AFL, while analyst target suggests 23.7% upside to $319.80. The stock’s rich valuation and mixed signals across fundamentals, sentiment, and price momentum support a neutral stance with moderate conviction.
Key Strengths
20% year-over-year revenue growth, outpacing the sector average of 21.36% and demonstrating resilient top-line momentum in the insurance brokerage space
High operating margin of 17.21%, reflecting strong pricing power and cost discipline relative to sector peers
Solid free cash flow generation implied by historical consistency, supporting dividend sustainability and acquisition capacity
Attractive dividend yield of 1.01% with a reasonable 40.73% payout ratio, indicating capital return discipline
Market leadership in insurance brokerage with a large market cap ($66.39B), providing scale and client diversification
Key Risks
Earnings declining sharply YoY (-25.2%) and Q/Q (-12.8%), indicating near-term profitability pressure despite revenue growth
Rich valuation metrics: P/E of 41.30 vs sector average of 22.01 and peer group trading between 10.8x–15.0x, suggesting significant multiple compression risk
Deteriorating earnings surprise trend: only 1 beat in the last 4 quarters, with an average negative surprise of -2.2%
Bearish insider activity: $13.68M in net officer sales over the last 6 months, including CFO selling, signaling lack of confidence at the top
Weak short-term price momentum: -24.1% over 6 months and -12.7% over 1 month, underperforming both sector and broader market
AI Fair Value Estimate
Based on comprehensive analysis
$319.8
+23.7% above current price
Performance Snowflake
Multi-dimensional AI analysis across 5 key categories
Stock Price & Analyst Targets
Real-time price movements and analyst price targets
Historical Performance Trends
Long-term financial metrics and growth patterns
Valuation Metrics
Key valuation ratios and pricing indicators
Profitability, Growth & Financial Health
Detailed profit margins, ROE, debt ratios, and liquidity metrics
Sector Comparison & Peer Analysis
Compare AJG against industry averages and similar companies
Insider Trading & Analyst Ratings
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