One-glance verdict
Overvalued
$161.31 our estimate vs market $264.46
Wall Street consensus: $291.56 (80.7% higher than our fair-value estimate)
64% above our estimate, beyond the bull case
Fundamentals snapshot
Arthur J. Gallagher & Co.
AJG · NYQ · Financial Services · Insurance Brokers
Current price
$264.46
52-week range
$190.75 - $313.55
Market cap
$67.79B
Balance sheet
Stretched
4.00x Stretched
Net debt $12.72B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 13.0% last year.
- Reward Free cash flow was positive in 10/10 years.
- Risk Net debt grew 113.0% over 3 years.
- Risk Operating margin compressed from 19.5% to 19.2% over 3 years.
What this company does
Arthur J. Gallagher & Co.
Arthur J. Gallagher & Co. is a global insurance broker, acting like a matchmaker that connects businesses needing insurance with the companies that provide it. The company earns fees for this service and for helping manage risks, which creates a steady business because clients tend to renew their policies every year, providing a stream of recurring revenue (income that is highly likely to continue in the future).
How the company got here
Arthur J. Gallagher & Co. started in 1927 when its founder, Arthur Gallagher, opened a small insurance agency in Chicago. The business grew as his sons joined after World War II, and it began to make a name for itself by creating innovative insurance ideas. A key moment was the creation of Gallagher Bassett in 1962, a new part of the company focused on helping clients who self-insure manage their insurance claims. The company became publicly traded on the stock market in 1984 to raise money for more growth. A major part of its strategy has been to grow by acquiring hundreds of smaller insurance and consulting firms over the years.
What it actually does
Think of Arthur J. Gallagher & Co. as an expert guide to the complicated world of insurance. For businesses and other organizations, they act as a broker (an intermediary or agent) to help them find and buy the right insurance protection from a variety of insurance companies. They don't sell their own insurance; instead, they use their expertise to negotiate good deals for their clients. Beyond just buying insurance, they also provide advice on how to manage risks to prevent losses from happening in the first place. They also help manage the claims process when something does go wrong.
Brokerage
This is the company's largest business, making up the vast majority of its revenue (the money it brings in). In this segment, the company earns commissions or fees by acting as a matchmaker between its clients and insurance carriers. This includes helping businesses get all types of insurance, from protecting their buildings to providing health benefits for their employees. This segment also includes a specialized business that helps insurance companies buy their own insurance, which is called reinsurance.
Risk Management
This part of the company, largely operated under the name Gallagher Bassett, focuses on what happens after an incident occurs. It provides services for companies that choose to self-insure (meaning they pay for their own losses instead of buying a traditional insurance policy). For these clients, Gallagher Bassett manages the entire claims process, such as handling workers' compensation or auto insurance claims. They also offer consulting services to help businesses identify potential problems and reduce their overall risk of future losses.
What management is betting on now
The company's main strategy for growth is to continue acquiring other insurance brokerage and consulting firms. This allows them to expand into new markets and bring in new clients and expertise. They are also focused on organic growth (gaining more business from new and existing clients without buying other companies). Management is looking to grow by focusing on specific areas, such as mid-sized businesses, industries with unique insurance needs like construction and healthcare, and reaching smaller businesses through digital tools.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$898.00M
FY2024 Q4
$695.70M
FY2025 Q1
$843.60M
FY2025 Q2
$-465.50M
FY2025 Q3
$693.50M
FY2025 Q4
$713.40M
FY2026 Q1
$921.00M
FY2026 Q2
$-41.00M
Revenue
$4.00B
Net income
$324.00M
Diluted EPS
1.25
Operating cash flow
$10.00M
Free cash flow
$-41.00M
Fetching…
Sources
Revenue
$4.76B
Net income
$822.00M
Diluted EPS
3.16
Operating cash flow
$957.00M
Free cash flow
$921.00M
Fetching…
Sources
Revenue
$3.63B
Net income
$151.10M
Diluted EPS
0.58
Operating cash flow
$753.00M
Free cash flow
$713.40M
Fetching…
Sources
Revenue
$3.37B
Net income
$272.70M
Diluted EPS
1.04
Operating cash flow
$731.30M
Free cash flow
$693.50M
Fetching…
Sources
Revenue
$3.22B
Net income
$365.80M
Diluted EPS
1.40
Operating cash flow
$-426.10M
Free cash flow
$-465.50M
Fetching…
Sources
Revenue
$3.73B
Net income
$704.40M
Diluted EPS
2.72
Operating cash flow
$871.80M
Free cash flow
$843.60M
Fetching…
Sources
Revenue
$2.72B
Net income
$258.30M
Diluted EPS
1.10
Operating cash flow
$739.30M
Free cash flow
$695.70M
Fetching…
Sources
Revenue
$2.81B
Net income
$312.60M
Diluted EPS
1.39
Operating cash flow
$934.80M
Free cash flow
$898.00M
Fetching…
Sources
Is it cheap or expensive?
Fair value $161.31 vs current price $264.46
Wall Street consensus is the average analyst price target: $291.56 (80.7% higher than our fair-value estimate).
Our most-likely fair value is $161.31 a share — about 39.0% below today's price of $264.46, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Stretched
Net debt $12.7B. Interest coverage 4.0x.
Net debt
$12.72B
Interest coverage
4.00x
Arthur J. Gallagher & Co.'s profit covers its interest bill about 4.0 times over.
Stretched
Worse cushion
Baseline
Better cushion
AJG
BASELINE
Arthur J. Gallagher & Co.
Total debt $14.11B Interest coverage 4.00x This is the baseline the peer rows are being compared against.
Total debt $22.38B Interest coverage 6.48x +62% vs AJG Carries about 1.6x more debt cushion than AJG.
Total debt $15.87B Interest coverage 5.78x +44% vs AJG Carries about 1.4x more debt cushion than AJG.
Total debt $7.10B Interest coverage 8.68x +117% vs AJG Carries about 2.2x more debt cushion than AJG.
Total debt $8.07B Interest coverage 4.91x +23% vs AJG Carries about 1.2x more debt cushion than AJG.
Total debt $3.81B Interest coverage 2.32x -42% vs AJG Carries about 1.7x less debt cushion than AJG.
What you should know
The case for and against AJG
3 Rewards
3 Risks
Rewards
-
Revenue grew 13.0% last year.
-
Free cash flow was positive in 10/10 years.
-
Dividend yield is 1.1% with 39-year payout history.
Risks
-
Net debt grew 113.0% over 3 years.
-
Operating margin compressed from 19.5% to 19.2% over 3 years.
-
Insider ownership is only 0.9% (peer median: 1.0%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
43.50x
Forward P/E
17.76x
P/B
2.86x
P/S
4.49x
EV/EBITDA
18.78x
PEG ratio
0.78x
Profitability
How much profit each dollar creates
Gross margin
43.2%
Operating margin
19.2%
Net margin
10.4%
ROE
6.7%
ROA
2.3%
Health
Liquidity and balance-sheet strength
Debt / equity
0.59x
Current ratio
1.05x
Quick ratio
0.17x
Total debt
$14.11B
Total cash
$1.39B
Growth
How the business has been compounding
Revenue TTM
$15.75B
Revenue 5Y CAGR
14.2%
EPS TTM
6.08
EPS 5Y CAGR
3.4%
Cash flow
How much cash the business throws off
Operating CF TTM
$2.45B
Free CF TTM
$1.78B
FCF margin
11.3%
Dividend
Shareholder payout
Yield
1.1%
Payout ratio
44.8%
Last ex-div date
2026-09-08