Arthur J. Gallagher & Co

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AJG : NYSE : Financial
$58.66 -0.44 | -0.74%
Today's Range: 58.56 - 59.18
Avg. Daily Volume: 860600.0
07/26/17 - 3:59 PM ET

Financial Analysis


ARTHUR J GALLAGHER & CO's gross profit margin for the first quarter of its fiscal year 2017 is essentially unchanged when compared to the same period a year ago. Sales and net income have grown, and although the growth in revenues has outpaced the average competitor within the industry, the net income growth has not. ARTHUR J GALLAGHER & CO has weak liquidity. Currently, the Quick Ratio is 0.92 which shows a lack of ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year.

At the same time, stockholders' equity ("net worth") has remained virtually unchanged only increasing by 1.81% 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 Q1 FY17 Q1 FY16
Net Sales ($mil)1412.71300.4
EBITDA ($mil)206.6190.9
EBIT ($mil)112.8106.9
Net Income ($mil)55.746.5


Balance Sheet Q1 FY17 Q1 FY16
Cash & Equiv. ($mil)1822.01728.9
Total Assets ($mil)11780.610712.6
Total Debt ($mil)2944.12523.0
Equity ($mil)3662.53597.1


Profitability Q1 FY17 Q1 FY16
Gross Profit Margin14.6214.68
EBITDA Margin14.6214.68
Operating Margin7.988.22
Sales Turnover0.480.51
Return on Assets3.593.56
Return on Equity11.5610.6
Debt Q1 FY17 Q1 FY16
Current Ratio0.940.98
Debt/Capital0.450.41
Interest Expense29.925.8
Interest Coverage3.774.14


Share Data Q1 FY17 Q1 FY16
Shares outstanding (mil)179.51177.13
Div / share0.390.38
EPS0.310.26
Book value / share20.420.31
Institutional Own % n/a n/a
Avg Daily Volume866499.0900267.0

Valuation


BUY. ARTHUR J GALLAGHER & CO's P/E ratio indicates a discount compared to an average of 29.89 for the Insurance industry and a value on par with the S&P 500 average of 24.66. For additional comparison, its price-to-book ratio of 2.86 indicates valuation on par with the S&P 500 average of 3.07 and a premium versus the industry average of 1.91. The current price-to-sales ratio is below the S&P 500 average, but above the industry average.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
AJG 24.59 Peers 29.89   AJG 15.27 Peers 11.69

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

AJG is trading at a discount 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 17.39 Peers 16.36   AJG 0.81 Peers 2.85

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 2.86 Peers 1.91   AJG 9.21 Peers 19.96

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 1.83 Peers 1.51   AJG 4.49 Peers 12.67

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 premium to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

AJG significantly trails its peers on the basis of sales growth

 

 

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