Will Arthur J. Gallagher (AJG) Beat Q2 Earnings Estimates?
Arthur J. Gallagher & Co. AJG is slated to report second-quarter 2022 earnings on Jul 28, after market close. The insurer delivered an earnings surprise in each of the last four reported quarters, the average being 6.52%.
Factors to Consider
Arthur J. Gallagher’s second-quarter results are expected to benefit from new business, strong retention and renewal premium increases across its business lines.
Fees and commissions in the to-be-reported quarter are likely to have benefited from revenues associated with acquisitions, organic revenue growth, organic change in base commission and fee revenues. The Zacks Consensus Estimate for fees is pegged at $616 million, indicating an increase of 19.8% from the prior-year period’s reported number. The consensus mark for commissions stands at $1.2 billion, implying 25.6% growth from the prior-year period’s reported number.
The property and casualty brokerage operations are likely to have benefited from new business, strong retention, exposure and renewal premium increases across most geographies and lines of coverage. AJG had stated that a mix shift away from workers’ compensation renewals in the first quarter to U.S. property cat renewals in the second will drive an increase in premiums in the to-be-reported quarter.
The employee benefit brokerage and consulting business is likely to have been aided by improving domestic labor market conditions.
Arthur J. Gallagher estimates organic revenue growth from existing clients, growing claim counts and new business to favor Brokerage and Risk Management segments in the second quarter of 2022 and thus projects organic growth to hover around 10%.
Net investment income in the to-be-reported quarter is likely to have gained from increases in interest income from U.S. operations and increases in income from partially-owned entities accounted for using the equity method.
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 second-quarter revenues stands at $2 billion, indicating an increase of 7% from the year-ago quarter’s reported figure.
Total expenses are likely to have increased mainly due to higher compensation and operating cost, higher cost of revenues from clean coal activities, increased amortization and change in estimated acquisition earnout payables.
The Zacks Consensus Estimate for second-quarter earnings per share stands at $1.68, indicating an increase of 43.6% from the year-ago quarter reported figure.
What the Zacks Model Says
Our proven model predicts 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.
Earnings ESP: Arthur J. Gallagher has an Earnings ESP of +0.37%. This is because the Most Accurate Estimate of $1.69 is pegged higher than the Zacks Consensus Estimate of $1.68. 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
Arthur J. Gallagher & Co. price-eps-surprise | Arthur J. Gallagher & Co. Quote
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.
Other Stocks to Consider
Some other insurance stocks with the right combination of elements to come up with an earnings beat this time around are:
Cincinnati Financial Corporation CINF has an Earnings ESP of +2.86% and a Zacks Rank of 3. The Zacks Consensus Estimate for second-quarter 2022 earnings is pegged at $1.05, indicating a decrease of 41.3% from the year-ago reported figure.
CINF’s earnings beat estimates in the last four reported quarters.
Willis Towers Watson plc WTW has an Earnings ESP of +1.79% and a Zacks Rank #3. The Zacks Consensus Estimate for second-quarter 2022 earnings is pegged at $2.31 per share, indicating a decrease of 13.2% from the year-ago reported figure.
WTW’s earnings beat estimates in the last four reported quarters.
Assurant Inc. AIZ has an Earnings ESP of +0.16% and a Zacks Rank of 3. The Zacks Consensus Estimate for second-quarter 2022 earnings is pegged at $3.18, indicating an increase of 6.4% from the year-ago reported figure.
AIZ’s earnings beat estimates in the last four reported quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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