Over the last six months, Arthur J. Gallagher’s shares have sunk to $215.97, producing a disappointing 13.9% loss - a stark contrast to the S&P 500’s 12.4% gain. This may have investors wondering how to approach the situation.
Following the pullback, is now a good time to buy AJG? Find out in our full research report, it’s free.
Why Are We Positive on Arthur J. Gallagher?
Founded in 1927 and operating in approximately 130 countries through direct operations and correspondent networks, Arthur J. Gallagher (NYSE: AJG) provides insurance brokerage, reinsurance, consulting, and third-party claims settlement services to businesses and individuals worldwide.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Arthur J. Gallagher’s sales grew at an incredible 17.5% compounded annual growth rate over the last five years. Its growth beat the average business services company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Arthur J. Gallagher’s astounding 18.5% annual EPS growth over the last five years aligns with its revenue performance. This tells us its incremental sales were profitable.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Arthur J. Gallagher has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the business services sector, averaging 18.9% over the last five years.
Final Judgment
These are just a few reasons why Arthur J. Gallagher is one of the best business services companies out there. After the recent drawdown, the stock trades at 15.7× forward P/E (or $215.97 per share). Is now a good time to buy? See for yourself in our full research report, it’s free.
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