Looking at Brown & Brown, Inc.'s (NYSE:BRO) earnings update in December 2018, analyst consensus outlook appear cautiously subdued, with profits predicted to rise by 7.9% next year against the higher past 5-year average growth rate of 16%. With trailing-twelve-month net income at current levels of US$344m, we should see this rise to US$371m in 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Brown & Brown in the longer term. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Can we expect Brown & Brown to keep growing?
The longer term expectations from the 8 analysts of BRO is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of US$344m and the final forecast of US$439m by 2022, the annual rate of growth for BRO’s earnings is 8.0%. EPS reaches $1.58 in the final year of forecast compared to the current $1.24 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 17% to 16% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Brown & Brown, I've compiled three relevant aspects you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Brown & Brown worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Brown & Brown is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Brown & Brown? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.