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What's in Store for Arthur J. Gallagher (AJG) in Q2 Earnings?

Zacks Equity Research

Arthur J. Gallagher & Co. AJG is slated to report second-quarter 2019 results on Jul 25, after market close. The company delivered positive earnings surprise in three of the last four quarters.

Let’s see how things are shaping up for this announcement.

Arthur J. Gallagher’s second-quarter results are likely to benefit from solid performance of Brokerage and Risk Management segments.

Its compelling product portfolio along with strong domestic and international operations is likely to aid fees and commissions. The Zacks Consensus Estimate for fees is pegged at $450 million, indicating an upside of 6.6% on a year-over-year basis. The consensus mark for commissions stands at $786 million, implying 14.2% growth.

Organic sales as well as strategic mergers and acquisitions are expected to drive revenues. The Zacks Consensus Estimate for revenues is pegged at $1.95 billion, indicating an increase of 9% from the year-ago reported figure.

An improved interest rate environment is likely to boost net investment income.

Expenses are likely to increase due to higher compensation and operating expenses.

The Zacks Consensus Estimate for second-quarter earnings is pegged at 62 cents, same as the year-ago reported figure.

What Our Quantitative Model Says

Our proven model does not conclusively show that Arthur J. Gallagher is likely to beat estimates this reporting cycle. This is because the stock does not have the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP:  Arthur J. Gallagher has an Earnings ESP of +2.43%. This is because the Most Accurate Estimate of 62 cents is higher than the Zacks Consensus Estimate of 61 cents. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Arthur J. Gallagher & Co. Price and EPS Surprise

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 has a Zacks Rank #4 (Sell).

We caution against Zacks Rank #4 or 5 (Strong Sell) stocks  going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some stocks from the insurance industry with the perfect mix of elements to surpass estimates this time around.

Marsh & McLennan Companies, Inc. MMC is set to report second-quarter earnings on Jul 30 and has an Earnings ESP of +0.63%. The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lincoln National Corporation LNC has an Earnings ESP of +0.52% and a Zacks Rank of 3. The company is set to release second-quarter earnings on Jul 31.

The Hartford Financial Services Group, Inc. HIG has an Earnings ESP of +0.63% and a Zacks Rank #3. The company is slated to announce second-quarter earnings on Aug 1.

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