Brown & Brown’s BRO shares have rallied 10.2% year to date, outperforming the industry’s growth of 2.6%. The Finance sector has fallen 1.5% in the same period. With a market capitalization of $17.8 billion, the average volume of shares traded in the last three months was 1.3 million.
New businesses, better customer retention, premium rate increases across the majority of business lines, strategic acquisitions and strong financial position continue to drive this Zacks Rank #2 (Buy) insurance broker’s performance.
BRO has a decent history of delivering earnings surprises in the last four reported quarters. Earnings of the insurer increased 16.8% in the last five years, better than the industry average of 21.6%.
BRO’s total shareholder return has outperformed both its peer group and the S&P 500 in the last five years. The 10-year average total shareholders' return was 597%.
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Can BRO Retain the Bull Run?
The Zacks Consensus Estimate for 2023 earnings stands at $2.52, suggesting a year-over-year increase of 10.5% on 13.2% higher revenues of $4.1 billion. The consensus estimate for 2024 earnings is pegged at $2.75, indicating a year-over-year increase of 9.2% on 6.1% higher revenues of $4.3 billion.
Brown and Brown’s top line is likely to continue benefiting from improving commissions and fees across all its segments. The top line witnessed a five-year annual growth rate of 12%. Increasing new business, strong retention and continued rate increases for most lines of coverage should boost commissions and fees for BRO. The insurance broker intends to make consistent investments in boosting organic growth and margin expansion.
Brown & Brown boasts an impressive inorganic story that helps strengthen its compelling products and service portfolio, expands global reach and accelerates growth rate. Strategic buyouts also help BRO to capitalize on growing market opportunities.
Its sustained solid operational excellence aids BRO in making continuous investments to boost organic growth and margin expansion.
A solid capital position supported BRO in increasing dividends over the last 29 years at a five-year (2019-2023) CAGR of 6.57%, making it an attractive pick for yield-seeking investors.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are Erie Indemnity ERIE, Ryan Specialty Group Holdings RYAN and Berkshire Hathaway (BRK.B).
The Zacks Consensus Estimate for ERIE’s 2023 and 2024 earnings indicates a respective 26.1% and 13.6% year-over-year increase. Year to date, the insurer has lost 13.9%.
It has a VGM Score of B. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
RYAN delivered a four-quarter average earnings surprise of 2.98%. Year to date, the insurer has gained 0.5%.
The Zacks Consensus Estimate for Ryan Specialty’s 2023 and 2024 EPS indicates a respective 15.7% and 23.3% increase year over year. The company carries a Zacks Rank #2 at present.
Berkshire Hathaway delivered a four-quarter average earnings surprise of 20.29%. Year to date, the insurer has gained 6.4%.
The Zacks Consensus Estimate for BRK.B’s 2023 and 2024 earnings indicates a respective year-over-year increase of 35.8% and 1.3%. It presently carries a Zacks Rank #2.
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