Should You Add Brown & Brown (BRO) Stock for Better Returns?

Core Insights - Brown & Brown, Inc. (BRO) is positioned for growth through higher core commissions and fees, new business, solid retention, rate increases, strategic acquisitions, a strong financial position, and effective capital deployment [1] - The company has outperformed its peer group and the S&P 500 over the last five years, with a 10-year average total shareholder return of 399% [1] Performance Metrics - BRO's shares have increased by 23% year to date, surpassing the industry's growth of 8.5%, the Finance sector's increase of 4.1%, and the Zacks S&P 500 composite's rise of 9.8% [2] - The Zacks Consensus Estimate for BRO's 2024 earnings per share is $3.51, reflecting a 24.9$4.6 billion, a 9.2% increase [4] - For 2025, the earnings per share estimate is $3.79, indicating an 8$4.9 billion, which is a 6.2% rise [4] Growth Drivers - The expected long-term earnings growth for BRO is 10.1%, which is better than the industry average of 9.7% [5] - The company has achieved an 18.4% earnings growth over the past five years, exceeding the industry average of 13.2% [5] - Key growth drivers include increasing new business, strong retention, and continued rate increases across most lines of coverage, contributing to a five-year annual growth rate of 14% in the top line [5] Strategic Initiatives - BRO plans to invest consistently in organic growth and margin expansion, boasting an industry-leading adjusted EBITDAC margin [6] - The company has a strong inorganic growth strategy through strategic acquisitions, which enhance its product and service portfolio, expand global reach, and accelerate growth [6] Financial Health - Brown & Brown maintains a strong liquidity position and improved leverage ratio, ensuring robust cash conversion [8] - The company effectively deploys cash into acquisitions, capital expenditures, and shareholder wealth distribution through dividend increases [8] Dividend Performance - BRO has a solid track record of raising dividends for 30 consecutive years, with a five-year annualized dividend growth of 10.6% and a dividend yield of 0.6% [9]