Arthur J. Gallagher & Co. (AJG) Stock Analysis
Arthur J. Gallagher & Co.
▾ What's in the 54/100 risk score? (higher = riskier)
Contributions (weight × component score) sum to the total. This near-term score now includes fundamental health (leverage, FCF trend, DCF applicability). It excludes the Altman Z score, whose retained-earnings input this filer does not report separately. See the Financial Health section for the full balance-sheet read.
How to read AJG
A profitable, cash-generating business — our discounted-cash-flow estimate is the primary lens, cross-checked against what growth the price implies and against peers.
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1
The verdict + intrinsic value (our DCF) ↓
Our estimate of what a share is worth, versus today's price.
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2
Reverse-DCF + the interactive calculator ↓
See the growth the price assumes, then flex every assumption yourself to pressure-test it.
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3
Football field + peers ↓
A cross-check across methods and against comparable companies.
Is now a good time to buy AJG?
Macro: Neutral / mid-cycle
AJG trades at $248.04 vs an estimated
intrinsic value
of $155.64
— a +59.4% premium to model IV.
Today's price is consistent with AJG's owner-earnings free cash flow per share growing about 13.4% per year 5-YR · SCENARIO PATH over the next 5 years (the
price-implied growth rate).
Our DCF projects
modeled growth
of 8.5% per year based on history + sector defaults
(analyst consensus estimates not yet integrated).
Note: this is a 5-year, per-share view. The Reverse-DCF section below asks the same question on a stricter 10-year free-cash-flowFree Cash Flow (FCF) — Operating cash flow minus capital spending: cash left after a company covers operating costs, taxes and interest and reinvests in the business — but BEFORE repaying debt principal or paying dividends. The cash actually available to investors.
Why it matters: A company can show big profits on paper while burning through cash. FCF is what actually fills the bank account.
Reference: Healthy mature businesses convert 8–15% of revenue into FCF · Growth companies often negative
Full explanation → basis — so its growth number is different, not contradictory.
▾ Exactly how this 5-year figure is computed
Current price: $248.04 (live)
Discount rate: 10.0%; terminal growth: 3.0%
Forecast: 5 years explicit growth, then a linear fade to terminal; end-of-period cash flows discounted to today
Growth path: the model's scenario-weighted path (conservative 40% / base 35% / optimistic 25% — assumed weights, not measured probabilities) — see the "Three Scenarios, Weighted" table below for the three IVs
Method: solve for the constant 5-year per-share growth rate that, run through this same structure, makes the intrinsic value equal today's price. (The 10-year figure below uses a flat 10-yr path instead — hence a different number.)
Not investment advice. The model can be wrong. Verify the assumptions in the sections below and consider consulting a licensed advisor for significant decisions.
What growth must the market believe? Reverse DCF — Instead of asking "what is this stock worth?", asks "what growth rate is the current market price already assuming?"
Why it matters: It crystallizes the bull thesis as a single number you can argue with. If the market expects 40% growth for 10 years and you do not believe that, the stock is overvalued.
Reference: 10–15% = sustainable for strong companies · 20–25% = exceptional · 30%+ = historically very rare
Traditional DCF asks "what is this stock worth?" Reverse DCF flips it: it treats today's price as correct and solves for the growth rate that justifies it. In plain terms — if our model is right about everything else, the company's cash flow would have to grow (or shrink) by this much every year for the next 10 years for today's price to make sense. If that required growth looks unrealistic, the price is stretched; if it looks easy to beat, the price may be cheap.
Why it matters: A company can show big profits on paper while burning through cash. FCF is what actually fills the bank account.
Reference: Healthy mature businesses convert 8–15% of revenue into FCF · Growth companies often negative
Full explanation → must grow at:
▾ Exactly how this 10-year figure is computed
Forecast length: 10 years, single flat growth rate (no fade)
Terminal growth after year 10: 3.0%
Discount rate: 10.0% (the rate the model used)
Price used: $248.04 — the live price shown on this page (not frozen)
Method: solve for the constant annual growth rate that makes the discounted 10-year FCF stream + terminal value equal today's price.
Above-average expectation. Achievable for genuinely strong compounders but the business needs to execute well.
For reference: Demanding — relatively few large companies sustain this pace of cash-flow growth for a full decade.
▾ How we computed this · Reality check thresholds · Assumptions
- Starting FCF/share: $7.91 (TTM)
- Discount RateDiscount Rate — The annual return you demand for taking single-stock risk instead of buying a safe Treasury or index fund.
Why it matters: Higher discount rate = stricter valuation (a stock has to produce more cash to be worth holding). Lower = more generous.
Reference: 8–12% is standard · 9–10% matches S&P 500 historical return · Below 7% is illogical for single-stock risk
Full explanation →: 10.0% — standard 8-12%; 9-10% matches S&P 500 historical return - Terminal Growth RateTerminal Growth Rate — The growth rate we assume the company holds forever, after the explicit 10-year forecast period ends.
Why it matters: It anchors the long-tail value. Cannot mathematically exceed long-term GDP growth or the company eventually becomes larger than the global economy.
Reference: 2–3% (matches long-term US GDP growth) · Above 4% is mathematically problematic
Full explanation →: 3.0% — matches long-term GDP growth - Forecast horizon: 10 years explicit + terminal perpetuity
| ≤ 0% | Priced for decline — likely undervalued OR dying business |
| 5-12% | Reasonable; sustainable for quality businesses |
| 12-18% | Demanding — strong execution required |
| 18-25% | Exceptional — few companies sustain for a decade |
| 25-35% | Heroic — historically very rare |
| 35%+ | Borderline impossible at scale |
Sustaining 30%+ cash-flow growth for a full decade at scale is exceedingly rare — the bar is brutally high.
Use the interactive calculator below to change the discount rate, growth and terminal-growth assumptions and watch the value move.
Football field: where does the price sit?
Different valuation methods produce different fair-value ranges depending on assumptions. Plotting them together lets you see at a glance whether the current price is reasonable across approaches, or only one specific lens.
Industry multiples sourced from: industry similar to Insurance. See the Peer Basket section below for the peer comparison and its limited-comparables caveat.
⚠ We found no genuine same-industry (Insurance Agents, Brokers & Service) comparables at all — fewer than the 4 we require for a reliable median. The 8 names in the table below therefore include 8 broader Financial Services names marked fallback, whose business models and margins differ — which is why any median below is computed over that wider set, not over true comparables. So we do not derive a peer-implied share value here. Read the multiples as rough context only.
How does AJG stack up against its closest peers?
Ideally we compare AJG only to same-industry peers, but too few exist in our universe right now, so the basket below mixes in broader-sector names. Treat the multiples as rough context, not a valuation. For a leveraged business, FCF yield (in the table) is usually more reliable than EV/Sales, because revenue multiples ignore differences in margins and debt.
▾ What's "EV / Sales" in plain English?
EV (Enterprise Value) = market cap + total debt − cash. It's "what you'd pay to buy the entire company outright" — you pay the market cap to shareholders and take over their debt, but you keep their cash. EV is fairer than market cap alone because it includes the debt the new owner inherits.
EV / Sales = EV ÷ annual revenue. So "2.5×" means investors pay $2.50 of enterprise value per $1 of yearly sales. Higher = market is paying more per dollar of sales (usually because they expect future growth or fat margins).
p25 / median / p75 are the 25th, 50th (middle), and 75th percentile of the peers' multiples. Half the peers fall between p25 and p75. The median (p50) is the typical peer — that's the benchmark we compare to.
Bold middle number = median peer. Half the peers trade above it, half below. Computed over 8 peers (broad — see caveat); implausible multiples excluded.
⚠️ Important caveat: peer multiples only work if the peers are genuinely comparable. Always check the peer list below — if the auto-picker grabbed micro-caps or unrelated businesses, the comparison is noise. A medical-device giant priced against tiny biotech startups won't produce a useful signal.
▾ View peer list (8)
| Ticker | Company | Industry | Mcap | EV/Sales | EV/GP | EV/EBIT | FCF Yield |
|---|---|---|---|---|---|---|---|
| VYLD | JPMORGAN CHASE & CO | Banks ·fallback | $77.9B | 0.4x | — | — | 70.5% |
| WF | WOORI FINANCIAL GROUP INC. | Banks ·fallback | $51.3B | — | — | — | 4.2% |
| XHG | XChange TEC.INC | Insurance Brokers ·fallback | $50.8B suspect | 989.2x | 45,157.3x | — | — |
| WPC | W. P. Carey Inc. | REITs ·fallback | $16.6B | 14.7x | — | — | 4.8% |
| YCS | ProShares Trust II | Investment Banking ·fallback | $15.8B | — | — | — | 10.8% |
| VLYPN | VALLEY NATIONAL BANCORP | Banks ·fallback | $14.3B | — | — | — | 4.1% |
| VLYPP | VALLEY NATIONAL BANCORP | Banks ·fallback | $13.9B | — | — | — | 4.2% |
| VLYPO | VALLEY NATIONAL BANCORP | Banks ·fallback | $13.9B | — | — | — | 4.2% |
Quality & solvency checks
Cheap stocks can be cheap for a reason. These screens warn when a low valuation comes paired with structural fragility.
Why it matters: Cheap-looking stocks (low P/E or P/B) often have low Z-scores because the market knows the company is dying. Z-score warns you before you fall into a value trap.
Reference: > 3.0 = safe zone · 1.81–3.0 = grey zone · < 1.81 = distress zone
Full explanation →
We can't produce a trustworthy Altman Z here: retained earnings weren't separately reported in our data, so a core input would have to be fabricated. Rather than show a categorical "distress" verdict from an invented number, we mark it unavailable. Judge financial health from the leverage, cash position, and the measurable Piotroski checks instead.
Why it matters: High score = fundamentals improving. Low score = deteriorating. Especially powerful for filtering cheap stocks: cheap + high F-score historically outperforms; cheap + low F-score is often a value trap.
Reference: 7–9 = strong · 4–6 = mediocre · 0–3 = weak
Full explanation →
The F-score compares two consecutive years of income, cash-flow and balance-sheet data. This filer is missing individual line items the checks depend on. We show nothing rather than score a partial year against itself. The reported figures in the financial tables below are unaffected.
What if you assume different inputs?
Here's where we land — and what happens if you change the assumptions. Drag the sliders to set your own Discount RateDiscount Rate — The annual return you demand for taking single-stock risk instead of buying a safe Treasury or index fund.
Why it matters: Higher discount rate = stricter valuation (a stock has to produce more cash to be worth holding). Lower = more generous.
Reference: 8–12% is standard · 9–10% matches S&P 500 historical return · Below 7% is illogical for single-stock risk
Full explanation → (the annual return you demand for single-stock risk) and terminal growth; the value updates live so you can see whether the stock looks cheaper or richer. The discount rate starts at 10.0%, the figure our model used for AJG. Open Advanced to also change beta, growth and the rate path.
Note: the calculator opens at our published value of $155.64 — it is initialised to the same scenario-weighted result, so the two match exactly on load. The moment you move a slider, the value below becomes a single-path what-if at your assumptions (not the three-scenario weighting), which is why it can differ from the headline once you've touched it.
+59.4%
At the default assumptions the flat path lands near our published value of $155.64. Move any slider to recompute it with your own.
Move any slider above to recompute this against your own assumptions.
⚙ Advanced — tinker with every input (beta, growth, rate path, margin → full intrinsic value)
Arthur J. Gallagher & Co. (AJG) appears deep overvalued, trading at a premium of +59.4% above its intrinsic valueIntrinsic Value — Our DCF model's estimate of what each share is mathematically worth based on projected cash flows.
Why it matters: Compare to current price. Below IV = potentially undervalued. Above IV = priced for growth that must actually happen.
Reference: Model-derived; quality depends on data and assumptions.
Full explanation → of $155.64. The current price of $202.65 implies a future growth rate of 13.4%, which is significantly higher than the modeled growth rate of 8.5%. The primary quantifiable risk is the market's expectation of nearly 5% higher growth than the model suggests, indicating potential for a valuation correction if growth targets are not met.
As of 3 months ago
Anatomy of a share
What you're buying per share. Bars are at the same scale so you can see the relative size of revenue, costs, cash flow, and debt — not just read them in a table.
What's free cash flow / what do these mean?
Revenue per share — how much the business earns from customers, divided by the number of shares outstanding. Top of the income statement.
Earnings per share — profit left after operating costs, interest, and taxes, per share. Two versions appear on this page and are not interchangeable: GAAP diluted EPS uses the company's weighted-average diluted share count during the reporting period (this is the "earnings" in "price-to-earnings"); net income per current share divides annual net income by today's share count. They differ whenever the share count has changed.
Owner-earnings free cash flow per share — the cash the business produces for shareholders. Savng's owner-earnings FCF subtracts capital expenditures and stock-based compensation from operating cash flow (SBC is a real dilution cost even though it's non-cash). This is deliberately more conservative than "standard" FCF, which subtracts only capital expenditures — so our figure is lower than the headline FCF you'll see elsewhere. FCF funds dividends, buybacks, debt repayment, and acquisitions; a company can report positive earnings yet negative FCF.
Debt per share — total interest-bearing borrowings divided by shares. High debt-per-share next to thin FCF-per-share is a fragility signal.
What you actually need to decide
Every stock price is a disagreement. Here's the single thing that must go right for the bulls, the single thing that breaks the thesis, and the concrete signposts to watch so you can update your view as real results arrive.
- Quarterly revenue growth rates
- Acquisition activity and integration success
The trend, in plain numbers (FY2022 → FY2023, latest reported)
Straight from the financial statements — no model, no opinion. For a small or unprofitable company, the direction of these numbers usually tells you more than any single valuation.
- Revenue grew +18% to $10.07B.
- Free cash flow rose to $2.03B.
- Net income grew +11% to $906.8M.
Nothing was clearly worsening year-over-year.
Management & Leadership
J. Patrick Gallagher, Jr. serves as the Chairman, President, and CEO of Arthur J. Gallagher & Co. He has been with the company for many years, leading its strategic direction and growth initiatives. Douglas K. Howell is the company's Chief Financial Officer.
What They Make
Arthur J. Gallagher & Co. is a global insurance brokerage and risk management services firm, providing a wide range of insurance products and consulting services to businesses and individuals.
End Markets
Revenue Drivers
Why Is It Priced Like This?
Why Customers Pay
AJG is priced at a premium of +30.2% to its intrinsic valueIntrinsic Value — Our DCF model's estimate of what each share is mathematically worth based on projected cash flows.
Why it matters: Compare to current price. Below IV = potentially undervalued. Above IV = priced for growth that must actually happen.
Reference: Model-derived; quality depends on data and assumptions.
Full explanation →, with the market implying a growth rate of 13.4% compared to the modeled 8.5%. This suggests that investors are anticipating significantly higher future performance than the current model projects. The bearish trend indicated by an RSI of 45.1 suggests some recent downward pressure on the stock, despite the high valuation.
Three Scenarios, Weighted
| Scenario | IV | Upside from today's price | Weight |
|---|---|---|---|
| Conservative | $134.07 | -45.9% | 40% |
| Base | $158.25 | -36.2% | 35% |
| Optimistic | $186.50 | -24.8% | 25% |
| Weighted | $155.64 | -37.3% | 100% |
Reading the last column: it is the move from today's price to each value (IV ÷ price − 1). The headline "premium/discount to model IV" measures the same gap from the value's side (price ÷ IV − 1), so the two percentages differ in size and sign by construction — e.g. a price 8% above value is a value 7.4% below price.
Business Model & Valuation
How They Make Money
Free Cash Flow DCF High
Standard FCF DCF: positive free cash flow in a sector suited for cash-flow-based valuation.
Show advanced inputs
| Revenue Growth | 8.8% |
| Eps Growth | 16.4% |
| Historical Fcf Growth | 14.3% |
| Sector Default | 8.0% |
| Best Estimate | 8.5% |
| Method | blend(70% revenue_cagr, 30% sector) |
| Growth Basis | total |
What this model does NOT do: this is a consolidated owner-earnings FCF model. Standalone segment assumptions: none. It does not project premium growth, underwriting (combined ratio) and investment income independently; their combined effect is embedded in the historical revenue and cash-flow trend the model extrapolates. The calculator above can only approximate a segment's impact through the single consolidated growth rate — it cannot model any one line separately. For a true segment-level view, build a separate model from the company's segment disclosures.
Maturity & Competitive Position
Moat Signals
Geography & Markets
Arthur J. Gallagher & Co. operates globally, with a significant presence in the United States, and substantial international operations across Europe, Australia, and other regions. Exact geographic segment percentages are not available in current filings.
Geographic Risks
Market Signals
These are timing signals, not value signals — they describe the stock's recent price behavior, not what the business is worth. Use them for the "the thesis looks good, but is now the moment?" question. Each tile below explains what it's saying.
Why it matters: Short-term contrarian indicator. Extreme readings often precede mean reversion, though not always.
Reference: 30–70 normal · >70 overbought · <30 oversold
Full explanation → (14)45.2NeutralMomentum is balanced — neither overbought nor oversold.
Why it matters: When the fast line crosses above the slow line, short-term momentum is turning up; below, turning down. A timing cue, not a value signal.
Reference: Line above signal = bullish momentum · below = bearish
Full explanation →BullishLine above signalThe fast trend is above the slow trend — short-term momentum is currently upward.
Technicals describe price, not the business. A great company can have a "bearish" tape (a buying chance) and a weak one a "bullish" tape (a trap). Pair these with the valuation and health sections above.
FINANCIALS
Financial Statements (5-year tables — click to expand)
From Arthur J. Gallagher & Co.'s SEC filings (EDGAR).
Income (5yr)
| Year | Revenue | Net Income | EPS |
|---|---|---|---|
| 2023 | 10.1B | 906.8M | $4.37 |
| 2022 | 8.6B | 818.8M | $4.20 |
| 2021 | 8.2B | 668.8M | $3.52 |
| 2020 | 7.0B | — | $0.00 |
| 2019 | 7.2B | — | $0.00 |
Cash Flow (5yr)
Capital expenditure isn't tagged in this filer's machine-readable data (the CapEx column shows "—"). The free-cash-flow column is therefore operating cash flow less stock-based compensation only — an upper bound on true owner earnings, not the real figure. Companies that report capex under a custom label (some large IFRS filers do) look better here than they are.
| Year | Operating CF | CapEx | − SBC & adj. | Free Cash Flow |
|---|---|---|---|---|
| 2023 | 2.0B | — | — | 2.0B |
| 2022 | 1.4B | — | — | 1.4B |
| 2021 | 1.4B | — | — | 1.4B |
| 2020 | 1.8B | — | — | 1.8B |
| 2019 | 1.2B | — | — | 1.2B |
How we define FCF: operating cash flow − capital expenditure − stock-based compensation (owner-earnings basis — SBC is a real cost to shareholders even though it's non-cash). This is the same owner-earnings FCF definition the valuation model uses.
Balance Sheet
| Total Assets | 22.3B |
| Total Liabilities | 24.8B |
| Equity | 8.5B |
| Total Debt | 16.8M |
Similar companies worth a look
Same sector and industry, similar fundamentals shape. Verify everything yourself — this list is computed mechanically and does not reflect our judgment about whether any of these are a good investment.