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Brown & Brown (BRO) Q3 Earnings & Revenues Beat Estimates

Zacks Equity Research

Brown & Brown, Inc. BRO reported third-quarter 2017 earnings of 53 cents per share, outpacing the Zacks Consensus Estimate by 8.2%. Also, earnings increased 1.9% year over year.

The quarter witnessed noticeable organic revenue growth across all divisions, partially offset by a rise in expenses. Nonetheless, the company saw an increase in the Commissions and fees segment in the reported quarter.

Brown & Brown, Inc. Price, Consensus and EPS Surprise


Brown & Brown, Inc. Price, Consensus and EPS Surprise | Brown & Brown, Inc. Quote

Behind the Headlines

Total revenue amounted to $475.6 million, edging past the Zacks Consensus Estimate of $474 million by approximately 0.3%. Also, the top line improved 2.9% year over year riding on higher Commissions and fees as well as net investment income. Organic revenue growth was 3.4% in the reported quarter.

Commissions and fees rose 2.8% year over year to $474.6 million.

Investment income skyrocketed 400% year over year to $0.5 million.

Total expenses inched up 1.6% to $351.2 million, driven by a rise in employee compensation and benefits, other operating expenses as well as depreciation.

Net income before interest, income taxes, depreciation, amortization and change in estimated acquisition earn-out payables (EBITDAC) margin contracted 50 basis points to 33.5%.

Financial Update

Brown & Brown exited the third quarter with cash and cash equivalents of $546.5 million, up nearly 6% from the 2016-end level.

Long-term debt of $860.7 million as of Sep 30, 2017 was down 15.5% from $1.0184 billion at the end of 2016.

Dividend Update

In the third quarter, this Zacks Rank #3 (Hold) company’s board of directors announced a quarterly dividend of 14 cents per share.

On Oct 12, 2017, the company’s board approved a quarterly cash dividend of 15 cents per share, reflecting an 11.1% hike from the earlier quarterly cash dividend of 13.5 cents per share. Notably, this dividend raise marks the 24th consecutive year of dividend increases. The dividend will be paid on Nov 8 to shareholders of record as of Oct 27, 2017.

Stocks to Consider

Some stocks worth considering from the insurance industry are Unum Group UNM, Reinsurance Group of America, Incorporated RGA and American Equity Investment Life Holding Company AEL.

Unum Group offers group and individual disability insurance products and services primarily in the United States and the United Kingdom. The company is set to release third-quarter results on Oct 25.  The company holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Reinsurance Group is primarily engaged in life reinsurance and international life and disability insurance on a direct and reinsurance basis. The company is set to release third-quarter results on Oct 26. The company sports a Zacks Rank #1.

American Equity develops and sells fixed index and fixed rate annuity products in the United States. The company is set to release third-quarter results on Nov 6. This company also flaunts a Zacks Rank of 1.

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