Brown & Brown(US:BRO) ZACKS·2026-01-15 16:40Core Insights - Brown & Brown, Inc. (BRO) shares are trading at a discount compared to the Zacks Brokerage Insurance industry, with a forward price-to-earnings multiple of 16.83X, lower than the industry average of 17.64X, the Finance sector's 17.22X, and the Zacks S&P 500 Composite's 23.51X [1] - The company has a market capitalization of $27.11 billion, with an average trading volume of 2.8 million shares over the last three months [1] Financial Performance - Brown & Brown's shares have declined by 25% over the past year, slightly better than the industry's decline of 26% [2] - The Zacks Consensus Estimate projects a 9.2% increase in earnings per share and a 23.7% increase in revenues for 2026 compared to 2025 estimates [4] - Earnings have grown by 21.5% over the past five years, surpassing the industry average growth of 15.2% [4] - The company has outperformed earnings estimates in three of the last four quarters, with an average surprise of 8.65% [4] Analyst Sentiment - The average price target for BRO, based on short-term targets from 16 analysts, is $95.81 per share, indicating a potential upside of 21.19% from the last closing price [5] Revenue Drivers - Commissions and fees, the primary revenue component, are benefiting from new business growth, strong retention rates, and ongoing rate increases across most coverage lines [10] - The company achieved its intermediate annual revenue goal of $4 billion, doubling its revenue in the last five years [10] - Strategic acquisitions, totaling 713 since 1993, have expanded BRO's market reach and product offerings [7][11] Operational Strengths - Brown & Brown maintains a strong liquidity position and an improving leverage ratio, ensuring effective cash deployment for acquisitions, capital expenditures, and shareholder returns through dividend increases [12] - The company has a robust dividend history, increasing dividends for the last 30 years at a five-year CAGR of 8.7% [13] Challenges - International expansion into markets like the UK, Bermuda, and the Cayman Islands introduces complexities, including regulatory changes and currency fluctuations, which could pressure margins [14] - Profitability metrics show that Brown & Brown's return on equity is 13.6%, significantly below the industry average of 24.8%, and return on invested capital is 6.7% compared to the industry's 8.6% [15] Conclusion - The combination of new business growth, strong retention, rate increases, strategic acquisitions, and a solid dividend history positions the company favorably for future growth [16] - However, risks associated with international expansion, regulatory challenges, and profitability pressures may impact near-term performance [16]