Stock of the Day

August 23, 2019

Arthur J. Gallagher & Co. (AJG)

$328.56
+$0.46 (+0.1%)
Market Cap: $84.19B

About Arthur J. Gallagher & Co.

Arthur J. Gallagher & Co. engages in the provision of insurance brokerage, reinsurance brokerage, consulting, and third-party claims settlement and administration services. It operates through the following segments: Brokerage, Risk Management, and Corporate. The Brokerage segment consists of retail and wholesale insurance brokerage operations. The Risk Management segment provides contract claim settlement and administration services. The Corporate segment manages clean energy and other investments. The company was founded by Arthur J. Gallagher in 1927 and is headquartered in Rolling Meadows, IL.

Arthur J. Gallagher & Co. Bull Case

Here are some ways that investors could benefit from investing in Arthur J. Gallagher & Co.:

  • The current stock price is around $344, reflecting a recent increase, which may indicate positive market sentiment towards the company.
  • Arthur J. Gallagher & Co. has a strong market capitalization of approximately $88.19 billion, suggesting a solid position in the financial services sector.
  • Recent analyst upgrades have increased price targets, with firms like Royal Bank of Canada raising their target to $340, indicating confidence in the company's growth potential.
  • Insider ownership is relatively low at 1.60%, which may suggest that the stock is accessible for new investors without heavy insider selling pressure.
  • The company has shown resilience with a stable debt-to-equity ratio of 0.63, indicating a balanced approach to leveraging and financial health.

Arthur J. Gallagher & Co. Bear Case

Investors should be bearish about investing in Arthur J. Gallagher & Co. for these reasons:

  • Insider selling has occurred recently, with a total of 32,510 shares sold, which could raise concerns about the confidence of current executives in the company's future performance.
  • The stock has a high price-to-earnings ratio of 52.77, which may indicate that it is overvalued compared to its earnings, potentially leading to a price correction.
  • Despite recent upgrades, two analysts have issued sell ratings, suggesting that there are differing opinions on the stock's future performance.
  • The stock's beta of 0.78 indicates lower volatility compared to the market, which may limit potential high returns for aggressive investors.
  • With a consensus rating of "Hold," there may be limited upside potential in the near term, indicating that investors should be cautious before making new investments.
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