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What Awaits Arthur J. Gallagher (AJG) This Earnings Season?

Arthur J. Gallagher & Co. AJG is slated to report fourth-quarter 2021 results on Jan 27, after market close. The company delivered an earnings surprise in each of the last four quarters, the average being 10.99%.

Factors to Consider

Arthur J. Gallagher’s fourth-quarter results are expected to reflect strong customer retention, new business generation, improved business activity and higher premium rates.

Fees and commissions in the to-be-reported quarter are likely to have benefited from revenues associated with acquisitions and organic change in base commissions and fee revenues. The Zacks Consensus Estimate for fees is pegged at $563 million, indicating an increase of 13.7% from the prior-year period’s reported number. The consensus mark for commissions stands at $997 million, implying 16.3% growth from the prior-year period’s reported number.

The property and casualty brokerage operations are likely to have benefited from strong customer retention and new business generation, improved renewal exposure units and continued increases in premium rates across most geographies and lines of coverage.

The employee benefit brokerage and consulting business is likely to have been aided by improved business activity, lower unemployment and increased demand for consulting services, improvement in covered lives on renewal business and new consulting and special project work.

Given strong new business generation, solid retentions, recovering global economy, improving employment situation and enhanced value-added services for carrier partners, the company expects organic growth in Brokerage and Risk Management in the fourth quarter of 2021.

Decreases in interest income from U.S. operations due to a decline in interest rates earned on funds are likely to have affected the company’s net investment income in the to-be-reported quarter.

Organic commission, fee, supplemental revenues, contingent revenues as well as strategic mergers and acquisitions are likely to have driven the top line in the to-be-reported quarter. The Zacks Consensus Estimate for fourth-quarter revenue stands at $1.8 billion, indicating an increase of 12.3% from the year-ago quarter’s reported figure.

Arthur J. Gallagher expects $30 million of pandemic period expense savings return in the fourth quarter.

The Zacks Consensus Estimate for fourth-quarter earnings per share stands at 94 cents per share, indicating an increase of 6.8% from the year-ago quarter reported figure.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Arthur J. Gallagher this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Arthur J. Gallagher has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 94 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Arthur J. Gallagher & Co. Price and EPS Surprise

Zacks Rank: Arthur J. Gallagher carries a Zacks Rank #3 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider 

Some stocks from the insurance industry with the apt combination of elements to surpass estimates this reporting cycle are as follows:

Marsh & McLennan Companies MMC has an Earnings ESP of +2.76% and a Zacks Rank of 2 currently. The Zacks Consensus Estimate for Marsh & McLennan’s 2022 earnings has moved 0.4% north in the past 30 days.

The Zacks Consensus Estimate for Marsh & McLennan’s 2022 earnings implies a year-over-year increase of 9.4%. MMC’s earnings surpassed estimates in each of the last four quarters, the average beat being 13.45%.

Willis Towers Watson WTW has an Earnings ESP of +4.31% and is Zacks #3 Ranked, presently. The Zacks Consensus Estimate for WTW’s 2022 earnings implies a year-over-year increase of 5.9%.

Willis Towers Watson’s earnings surpassed estimates in each of the last four quarters, the average beat being 15.27%.

American Equity Investment Life Holding AEL has an Earnings ESP of +4.56% and is a #3 Ranked player, currently. The Zacks Consensus Estimate for AEL’s 2022 earnings implies a year-over-year increase of 48.3%.

American Equity Investment’s earnings surpassed estimates in two of the last four quarters and missed in the other two, the average beat being 31.4%

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Marsh & McLennan Companies, Inc. (MMC): Free Stock Analysis Report
 
Arthur J. Gallagher & Co. (AJG): Free Stock Analysis Report
 
American Equity Investment Life Holding Company (AEL): Free Stock Analysis Report
 
Willis Towers Watson Public Limited Company (WTW): Free Stock Analysis Report
 
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