Yahoo Finance Brown & Brown (BRO) Rises 27% YTD: Can It Retain the Upside?
Shares of Brown & Brown BRO have rallied 27.3% year to date, outperforming the industry's growth of 9.8%, the Finance sector’s increase of 3.4% and the Zacks S&P 500 Composite’s rise of 7.6%. With a market capitalization of $25.8 billion, the average volume of shares traded in the last three months was 1.2 million.
Higher core commissions and fees, new business, solid retention, rate increases, strategic acquisitions, a strong financial position and effective capital deployment continue to drive this Zacks Rank #2 (Buy) insurance broker.
BRO’s total shareholder return has outperformed its peer group and the S&P 500 in the last five years. The 10-year average total shareholders' return was 399%.
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Can the Stock Retain Its Momentum?
The Zacks Consensus Estimate for BRO’s 2024 earnings per share (EPS) is pegged at $3.61, indicating an increase of 28.5% from the year-ago reported figure on 9.1% higher revenues of $4.6 billion. The consensus estimate for 2025 EPS is pegged at $3.90, implying an increase of 8% on 7.2% higher revenues of $5 billion.
The expected long-term earnings growth is 10.5%. Earnings have increased 18.4% in the past five years, better than the industry average of 13.8%.
Commissions and fees, the main component of the top line, benefit from increasing new business, strong retention and continued rate increases for most lines of coverage. The top line witnessed a five-year annual growth rate of 14%. The company met its intermediate annual revenue goal of $4 billion, doubling in the last five years.
The insurance broker continually makes investments in boosting organic growth and margin expansion. It boasts an industry-leading adjusted EBITDAC margin.
Brown & Brown’s strategic buyouts help it to capitalize on growing market opportunities, strengthen its compelling products and service portfolio, expand global reach and accelerate its growth rate. It acquired about $162 million of annual revenues in 2023.
Banking on operational expertise, Brown & Brown boasts a strong liquidity position with an improving leverage ratio. The strength of its operating model and diversity of businesses ensures strong cash conversion. The company effectively deploys cash into acquisitions, capital expenditure and wealth distribution for shareholders via dividend increases.
BRO has an impressive dividend history, raising dividends for 30 straight years. Its five-year annualized dividend growth is 10.6%, and its dividend yield is 0.6%.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are HCI Group, Inc. HCI, Palomar Holdings PLMR and ProAssurance PRA. Each stock presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group’s earnings surpassed estimates in each of the last four quarters, the average beat being 139.15%. In the past year, shares of HCI have rallied 10.5%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies 57.6% and 4.3% year-over-year growth, respectively.
Palomar’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 15.10%. In the past year, PLMR’s stock has surged 54.8%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings indicates 25.8% and 16.1% year-over-year growth, respectively.
ProAssurance earnings surpassed estimates in two of the last four quarters and missed in the other two. In the past year, PRA’s stock has lost 2.5%.
The Zacks Consensus Estimate for PRA’s 2024 and 2025 earnings implies 371.4% and 71.6% year-over-year growth, respectively.
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ProAssurance Corporation (PRA) : Free Stock Analysis Report
Brown & Brown, Inc. (BRO) : Free Stock Analysis Report
HCI Group, Inc. (HCI) : Free Stock Analysis Report
Palomar Holdings, Inc. (PLMR) : Free Stock Analysis Report
