Arthur J. Gallagher & Co

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AJG : NYSE : Financial
$49.15 -0.35 | -0.71%
Today's Range: 49.16 - 49.53
Avg. Daily Volume: 1,726,200
07/28/16 - 11:44 AM ET

Financial Analysis

ARTHUR J GALLAGHER & CO's gross profit margin for the first quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. The company managed to grow both sales and net income at a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year ago. ARTHUR J GALLAGHER & CO has weak liquidity. Currently, the Quick Ratio is 0.96 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.

During the same period, stockholders' equity ("net worth") has increased by 14.36% 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 FY16 Q1 FY15
Net Sales ($mil)1300.41231.3
EBITDA ($mil)191.2174.5
EBIT ($mil)107.298.3
Net Income ($mil)46.521.9

Balance Sheet Q1 FY16 Q1 FY15
Cash & Equiv. ($mil)1728.91463.4
Total Assets ($mil)10712.69730.9
Total Debt ($mil)2523.02335.8
Equity ($mil)3597.13145.2

Profitability Q1 FY16 Q1 FY15
Gross Profit Margin14.714.17
EBITDA Margin14.714.17
Operating Margin8.247.98
Sales Turnover0.510.51
Return on Assets3.562.83
Return on Equity10.68.77
Debt Q1 FY16 Q1 FY15
Current Ratio0.981.05
Interest Expense25.825.6
Interest Coverage4.163.84

Share Data Q1 FY16 Q1 FY15
Shares outstanding (mil)177.13166.66
Div / share0.380.37
Book value / share20.3118.87
Institutional Own % n/a n/a
Avg Daily Volume1699758.0987518.0


BUY. This stock's P/E ratio indicates a premium compared to an average of 15.99 for the Insurance industry and a discount compared to the S&P 500 average of 25.05. Conducting a second comparison, its price-to-book ratio of 2.39 indicates a discount versus the S&P 500 average of 2.81 and a premium versus the industry average of 1.55. The current price-to-sales ratio is below the S&P 500 average, but above the industry average. 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.

1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
AJG 22.41 Peers 15.99   AJG 13.41 Peers 12.79

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.


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.

1 2 3 4 5
premium   discount
  Price to
1 2 3 4 5
premium   discount
AJG 15.78 Peers 14.71   AJG 0.62 Peers 1.76

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.

1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
AJG 2.39 Peers 1.55   AJG 26.16 Peers 39.96

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.

1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
AJG 1.58 Peers 1.45   AJG 10.25 Peers -2.98

Average. 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 valuation on par with its industry on this measurement.


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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