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Brown & Brown Upgraded to Strong Buy

Zacks Equity Research

On Jun 18, Zacks Investment Research upgraded Brown & Brown Inc. (BRO) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Brown & Brown has been witnessing rising earnings estimates on the back of acquisitions. Moreover, a strong first-quarter performance aided the upward revisions.

In order to strengthen its New York operations, last week Brown & Brown of New York Inc. acquired some assets of The Rollins Agency Inc. The deal is expected to enhance the risk management capabilities of Brown & Brown and increase its clientele as well.

Earlier in May, Brown & Brown inked a deal with an insurance and risk management broker Beecher Carlson Holdings Inc. in an effort to fortify its insurance business.

Brown & Brown has always followed an inorganic route to ramp up its growth profile. In order to expand its business, the company acquired several entities in 2012 and is continuing with its acquisition strategy in this year as well.

Brown & Brown posted a solid first quarter with operating net earnings of 41 cents and delivered a positive surprise of 5.1%. The company also exceeded the quarterly net income run rate of $60 million and achieved quarterly internal growth rate of core commissions and fees revenues of 10.2%.

Moreover, this insurance broker delivered positive earnings surprises in 3 of the last 4 quarters with an average beat of 0.8%. The long-term expected earnings growth rate for this stock is 11.3%    

The Zacks Consensus Estimate for 2013 increased 2.7% to $1.52 per share as most of the estimates were revised higher over the last 60 days. For 2014, more than half of the estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 5.3% to $1.78 per share.

Other Stocks to Consider

Apart from Brown & Brown, Validus Holdings, Ltd. (VR) and Willis Group Holdings plc (WSH), both carrying a Zacks Rank #2(Buy), are also worth considering. Also, Assured Assured Guaranty Ltd. (AGO), a finance sector stock, carrying Zacks Rank #1 (Strong Buy) appears impressive.

Read the Full Research Report on BRO

Read the Full Research Report on WSH

Read the Full Research Report on AGO

Read the Full Research Report on VR

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