Yahoo Finance Brown & Brown to Become Affordable, Stock Split for 2-for-1
Brown & Brown, Inc. BRO has recently announced its decision to go for a two-for-one stock split of common stock. Shareholders of record as of Mar 14 will get one additional share for each share held.
The company expects to issue shares to make the stock split effective and will distribute the same to its shareholders on Mar 28. Due to issuance of the additional share, number of outstanding shares will increase to about 276 million from about 138 million.
Shares of Brown & Brown have been consistently trading above $40 since Nov 4, 2016. The stock has returned 25.4% in a year, higher than the industry’s rally of 21.7% and the S&P’s gain of 20.6%. Notably, share price of the stock will be slashed by half post spilt, thereby making it an attractive pick for potential investors.
The company’s shares are trading at a price to book multiple of 2.85, near the high end of its five-year trading range of 2.29-2.92 and much above the median of 2.29. Nonetheless, shares are cheaper than the current industry average.
Stock split increases the number of outstanding shares of a company without changing its market capitalization. A higher number of shares outstanding reflects lower stock price, thus making it affordable for shareholders. Strong fundamentals coupled with favorable industry trends make shares dearer as they trade at a premium. Following a stock split, value of the same shares falls and raises a stock's liquidity in turn.
Brown & Brown boasts impressive growth, driven by organic means and an encouraging inorganic story. Each division continues to deliver a promising performance. The insurance broker intends to make consistent investments for boosting organic growth and driving the margin expansion. The company has a solid earnings history, delivering a positive surprise for nine straight quarters.
Brown & Brown carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Investors also interested in other stocks worth considering from the insurance industry may include Erie Indemnity Company ERIE, Arthur J. Gallagher & Co. AJG and Alleghany Corporation Y in their portfolios.
Erie Indemnity Company operates as a managing attorney-in-fact for subscribers at the Erie Insurance Exchange in the United States. The company came up with a 5.26% positive earnings surprise last quarter and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Arthur J. Gallagher provides insurance brokerage and consulting services plus third-party claims settlement and administration services in the United States as well as internationally. The company came up with a 9.33% positive surprise and carries a Zacks Rank of 2.
Alleghany engages in property and casualty (P&C) reinsurance and insurance businesses in the United States and globally. The company pulled off a 30.47% positive surprise last quarter. The stock has a Zacks Rank of 1.
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Erie Indemnity Company (ERIE) : Free Stock Analysis Report
Brown & Brown, Inc. (BRO) : Free Stock Analysis Report
Arthur J. Gallagher & Co. (AJG) : Free Stock Analysis Report
Alleghany Corporation (Y) : Free Stock Analysis Report
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