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Stocks Under $10 with 50-100% upside potential - 14 days FREE!
Arthur J Gallagher & Co
AJG : NYSE : Financial
$47.59 0.14 | 0.30%
Today's Range: 47.45 - 47.76
Avg. Daily Volume: 745,100
12/26/14 - 1:08 PM ET

Financial Analysis


ARTHUR J GALLAGHER & CO's gross profit margin for the third quarter of its fiscal year 2014 has decreased when compared to the same period a year ago. The company has grown sales and net income significantly, outpacing the average growth rates of competitors within its industry. ARTHUR J GALLAGHER & CO has weak liquidity. Currently, the Quick Ratio is 0.88 which shows a lack of ability to cover short-term cash needs. The liquidity decreased from the same period a year ago, despite already having weak liquidity to begin with. This would indicate deteriorating cash flow.

At the same time, stockholders' equity ("net worth") has greatly increased by 68.51% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.

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Income Statement Q3 FY14 Q3 FY13
Net Sales ($mil)1289.3835.8
EBITDA ($mil)218.1152.6
EBIT ($mil)145.2107.5
Net Income ($mil)93.674.6


Balance Sheet Q3 FY14 Q3 FY13
Cash & Equiv. ($mil)1632.61211.1
Total Assets ($mil)9988.05970.2
Total Debt ($mil)2421.21060.5
Equity ($mil)3256.01932.2


Profitability Q3 FY14 Q3 FY13
Gross Profit Margin16.9218.26
EBITDA Margin16.9118.25
Operating Margin11.2612.86
Sales Turnover0.430.5
Return on Assets3.124.05
Return on Equity9.5712.52
Debt Q3 FY14 Q3 FY13
Current Ratio1.050.99
Debt/Capital0.430.35
Interest Expense25.913.1
Interest Coverage5.618.21


Share Data Q3 FY14 Q3 FY13
Shares outstanding (mil)161.37131.54
Div / share0.360.35
EPS0.580.57
Book value / share20.1814.69
Institutional Own % n/a n/a
Avg Daily Volume787658.0646023.0

Valuation


BUY. ARTHUR J GALLAGHER & CO's P/E ratio indicates a premium compared to an average of 14.76 for the Insurance industry and a premium compared to the S&P 500 average of 19.99. Conducting a second comparison, its price-to-book ratio of 2.35 indicates a discount versus the S&P 500 average of 2.76 and a premium versus the industry average of 1.55. The price-to-sales ratio is similar to the S&P 500 average, but it is significantly above the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, ARTHUR J GALLAGHER & CO proves to trade at a premium to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
AJG 22.69 Peers 14.76   AJG 24.37 Peers 14.49

Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations.

AJG is trading at a significant premium to its peers.

 

Premium. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

AJG is trading at a significant premium to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
AJG 16.96 Peers 15.59   AJG 1.11 Peers 1.56

Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.

AJG is trading at a premium to its peers.

 

Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

AJG trades at a significant discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
AJG 2.35 Peers 1.55   AJG 10.58 Peers 90.71

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

AJG is trading at a significant premium to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, AJG is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
AJG 1.79 Peers 1.23   AJG 44.37 Peers 13.02

Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

AJG is trading at a significant premium to its industry.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

AJG has a sales growth rate that significantly exceeds its peers.

 

 

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