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Brown and Brown (BRO) Stock Up 34% YTD: More Room to Run?

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Shares of Brown and Brown, Inc. BRO have rallied 34.3% year to date (YTD), outperforming the industry’s increase of 21.7%, the Finance sector’s rise of 17.4% and the S&P 500 composite index’s rally of 22.6%. With a market capitalization of $18 billion, the average volume of shares traded in the last three months was 2.2 million.

Zacks Investment Research
Zacks Investment Research

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Brown and Brown boasts five-year total shareholder returns of 205%, much above its peer group and the S&P 500.

Improving commission and fees, strong liquidity and effective capital deployment continue to drive Brown and Brown, which beat earnings estimates in the last eight quarters.

Can BRO Stock Retain the Momentum?

The Zacks Consensus Estimate for 2022 earnings has moved up 1.8% in the past 30 days, reflecting analysts’ optimism.

Revenues of Brown and Brown witnessed a 10-year CAGR of 10% and exceeded the peer average and the S&P 500. Improving new business and continued rate increases for most lines of coverage should help retain the growth momentum.

Strategic investments to drive organic growth, improve efficiency and margin bodes well for BRO.

Brown & Brown has an impressive inorganic story, acquiring more than 500 insurance intermediary operations in more than two decades.

Brown and Brown’s leverage ratio has been improving, while the times interest earned has increased over the last two years. Free cash flow witnessed a 10-year CAGR of 9%.

Operational excellence has paved the way for Brown and Brown to generate solid cash flows to be deployed in strategic initiatives as well as for shareholder-friendly moves. This Zacks Rank #2 (Buy) insurance broker increased dividend for the last 28 years. Dividends witnessed a five-year CAGR of 8.7%. The company has $323.6 million remaining under its authorization.

The consensus estimate for 2022 indicates a year-over-year improvement of 5.4% on 7.6% higher revenues.

Other Stocks to Consider

Some other top-ranked stocks from the insurance space include First American Financial FAF, Kinsale Capital Group KNSL and Cincinnati Financial Corporation CINF.

First American sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2021 and 2022 earnings has moved up 5.5% and 6.3%, respectively, in the past 30 days. First American delivered a four-quarter average earnings surprise of 29.19%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for 2021 and 2022 earnings of Kinsale Capital, sporting a Zacks Rank #1, has moved up 15.2% and 11.7% in the past 30 days. Kinsale Capital delivered a four-quarter average earnings surprise of 37.63%.

Cincinnati Financial carries a Zacks Rank #2. The Zacks Consensus Estimate for 2021 and 2022 has moved up 0.9% and 5% in the past 30 days. Cincinnati Financial delivered a four-quarter average earnings surprise of 40.05%.

Shares of First American Financial, Kinsale Capital and Cincinnati Financial have gained 43.7%, 1.8% and 29.2%, respectively year to date.


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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

First American Financial Corporation (FAF) : Free Stock Analysis Report

Brown & Brown, Inc. (BRO) : Free Stock Analysis Report

Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report

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