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New Lifetime High Reached: Arthur J. Gallagher (AJG)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Arthur J. Gallagher (AJG) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Arthur J. Gallagher as such a stock due to the following factors:

  • AJG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $34.8 million.
  • AJG has traded 9,639 shares today.
  • AJG is trading at a new lifetime high.

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More details on AJG:

Arthur J. Gallagher & Co. and its subsidiaries provide insurance brokerage and risk management services to various commercial, industrial, institutional, and governmental organizations. It operates in two segments, Brokerage and Risk Management. The stock currently has a dividend yield of 2.9%. AJG has a PE ratio of 25.7. Currently there are 7 analysts that rate Arthur J. Gallagher a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Arthur J. Gallagher has been 673,300 shares per day over the past 30 days. Arthur J. Gallagher has a market cap of $6.3 billion and is part of the financial sector and insurance industry. The stock has a beta of 0.97 and a short float of 0.4% with 0.75 days to cover. Shares are up 1.6% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Arthur J. Gallagher as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, good cash flow from operations, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 9.1%. Since the same quarter one year prior, revenues rose by 28.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ARTHUR J GALLAGHER & CO has improved earnings per share by 14.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ARTHUR J GALLAGHER & CO increased its bottom line by earning $1.60 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($2.15 versus $1.60).
  • Net operating cash flow has significantly increased by 75.94% to $204.80 million when compared to the same quarter last year. In addition, ARTHUR J GALLAGHER & CO has also vastly surpassed the industry average cash flow growth rate of -23.34%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Insurance industry and the overall market on the basis of return on equity, ARTHUR J GALLAGHER & CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 35.07% over the past year, a rise that has exceeded that of the S&P 500 Index. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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