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
Debt/Capital0.410.43
Interest Expense25.825.6
Interest Coverage4.163.84


Share Data Q1 FY16 Q1 FY15
Shares outstanding (mil)177.13166.66
Div / share0.380.37
EPS0.260.13
Book value / share20.3118.87
Institutional Own % n/a n/a
Avg Daily Volume1699758.0987518.0

Valuation


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.


Price/Earnings
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.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
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.

 
Price/Book
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.

 
Price/Sales
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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