It has been about a month since the last earnings report for Brown & Brown (BRO). Shares have added about 3.4% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Brown & Brown Q4 Earnings & Revenues Beat Estimates
Brown & Brown, Inc. fourth-quarter 2019 adjusted earnings of 28 cents per share beat the Zacks Consensus Estimate by 3.7% and grew 7.7% year over year.
Earnings were driven by higher commissions and fees, increased investment income and recent acquisitions.
Behind the Headlines
Total revenues of $579 million beat the Zacks Consensus Estimate by 1.9%. Moreover, the top line rose 13.7% year over year on higher commissions and fees plus net investment income.
Commissions and fees grew 13.6% year over year to $577 million.
Investment income surged 150% year over year to $1.5 million.
Total expenses increased 16.9% to $477 million due to a rise in employee compensation and benefits, amortization, change in estimated acquisition earn-out payables as well as other operating expenses and interest expense.
EBITDAC was $156.2 million, up 9.2% year over year. EBITDAC margin contracted 110 basis points year over year to 27%.
Financial Update
Brown & Brown exited the fourth quarter of 2019 with cash and cash equivalents of $542.2 million, up 23.5% from 2018-end level.
Long-term debt of $1.5 billion as of Dec 31, 2019 was up 3% from 2018 end.
Net cash provided by operating activities in the year 2019 was $678.2 million, up 19.5% year over year.
Dividend Update
The company paid out cash dividend of 8.5 cents per share in the fourth quarter, up 6.3% year over year.
Acquisition Update
Brown & Brown closed four acquisitions in the reported quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
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. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile 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
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. It comes with little surprise 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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