A month has gone by since the last earnings report for Brown & Brown (BRO). Shares have added about 0.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Brown & Brown due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Brown & Brown Q2 Earnings & Revenues Beat, Up Y/Y
Brown & Brown reported second-quarter 2019 earnings of 32 cents per share, which beat the Zacks Consensus Estimate by 14.3%. The bottom line improved 23.1% year over year.
The results reflect recent acquisitions, improved organic growth and margin expansion.
Behind the Headlines
Adjusted revenues of $575.2 million beat the Zacks Consensus Estimate by 3.3%. Moreover, the top line rose 21.6% year over year on higher commissions and fees plus net investment income. Organic revenues increased 3.9% in the reported quarter.
Commissions and fees grew 21.4% year over year to $572.9 million.
Investment income surged 114.3% year over year to $1.5 million.
Total expenses increased 21.4% to $451.7 million, driven by a rise in employee compensation and benefits as well as other operating expenses and interest expense.
EBITDAC was $168.6 million, up 22.4% year over year. EBITDAC margin expanded 20 basis points year over year to 29.3%.
Financial Update
Brown & Brown exited the second quarter of 2019 with cash and cash equivalents of $814.8 million, up 4.8% from 2018-end level.
Long-term debt of $1.4 billion as of Jun 30, 2019 was down 2% from 2018 end.
Net cash provided by operating activities in the first six months of 2019 was $305.7 million, up 10.2% year over year.
Dividend Update
The company paid cash dividend of 8 cents per share in the second quarter.
Acquisition Update
Brown & Brown closed four acquisitions in the reported quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
Currently, Brown & Brown has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Brown & Brown has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Brown & Brown, Inc. (BRO): Free Stock Analysis Report
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