Arthur J. Gallagher & Co

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AJG : NYSE : Financial
$52.75 up 0.08 | 0.15%
Today's Range: 52.57 - 52.9692
Avg. Daily Volume: 1134100.0
01/20/17 - 3:30 PM ET

Financial Analysis


ARTHUR J GALLAGHER & CO's gross profit margin for the third quarter of its fiscal year 2016 has increased when compared to the same period a year ago. Even though sales increased, the net income has decreased. ARTHUR J GALLAGHER & CO has weak liquidity. Currently, the Quick Ratio is 0.94 which shows a lack of ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year, indicating deteriorating cash flow.

During the same period, stockholders' equity ("net worth") has remained unchanged 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 FY16 Q3 FY15
Net Sales ($mil)1482.31454.8
EBITDA ($mil)238.5220.2
EBIT ($mil)149.6138.3
Net Income ($mil)122.8133.3


Balance Sheet Q3 FY16 Q3 FY15
Cash & Equiv. ($mil)1928.91719.3
Total Assets ($mil)11200.310510.4
Total Debt ($mil)2785.72392.6
Equity ($mil)3686.53652.4


Profitability Q3 FY16 Q3 FY15
Gross Profit Margin16.0915.14
EBITDA Margin16.0815.13
Operating Margin10.099.51
Sales Turnover0.50.51
Return on Assets3.43.29
Return on Equity10.359.47
Debt Q3 FY16 Q3 FY15
Current Ratio0.961.08
Debt/Capital0.430.4
Interest Expense28.525.6
Interest Coverage5.255.4


Share Data Q3 FY16 Q3 FY15
Shares outstanding (mil)177.94176.7
Div / share0.380.37
EPS0.690.75
Book value / share20.7220.67
Institutional Own % n/a n/a
Avg Daily Volume1103634.0987797.0

Valuation


BUY. ARTHUR J GALLAGHER & CO's P/E ratio indicates a discount compared to an average of 28.29 for the Insurance industry and a value on par with the S&P 500 average of 25.49. Conducting a second comparison, its price-to-book ratio of 2.54 indicates a discount versus the S&P 500 average of 2.84 and a premium versus the industry average of 1.59. 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 24.57 Peers 28.29   AJG 13.07 Peers 13.81

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.

 

Average. 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 valuation on par 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 17.24 Peers 17.49   AJG 0.73 Peers 1.96

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

AJG is trading at a valuation on par with 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 2.54 Peers 1.59   AJG 7.00 Peers 3.95

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.

 

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

AJG is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
AJG 1.69 Peers 1.41   AJG 4.46 Peers 10.38

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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