AJG Fair Value Estimate
$275.6526.7% undervalued
Blended fair value estimate based on DCF, Graham Number, and earnings-based models.
Arthur J. Gallagher & Company
Exchange: NYSESector: Financial ServicesIndustry: Insurance Brokers
Arthur J. Gallagher & Co., a global insurance brokerage, risk management and consulting services firm, is headquartered in Rolling Meadows, Illinois. Gallagher provides these services in approximately 130 countries around the world through its owned operations and a network of correspondent brokers and consultants.
Did you know?
AJG's revenue grew at a 11.7% CAGR over the last 6 years.
Current Price
$217.61
+0.59%GoodMoat Value
$275.65
26.7% undervaluedProfile
Valuation (TTM)
Market Cap$55.88B
P/E37.40
EV$67.75B
P/B2.40
Shares Out256.80M
P/Sales4.01
Revenue$13.94B
EV/EBITDA18.76
Arthur J. Gallagher & Company (AJG) Valuation
GoodMoat Analysis
Arthur J. Gallagher & Co. (AJG) is priced at a premium, with a P/E of 36.7x well above its sector and a current price offering a modest 22.5% margin of safety to the GoodMoat Target. While the target suggests a favourable valuation, the high multiple indicates the market is already pricing in significant future growth and quality, leaving a thinner margin of safety than a deep value investor might prefer.
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Based on the GoodMoat Investment Framework's valuation assessment, AJG's current price of $213.56 sits below the GoodMoat Target of $275.65. This implies a margin of safety of approximately 22.5%, which falls within the framework's 'Favourable' band (20–40%). However, this margin is at the lower end of that range. The primary valuation metric, the P/E ratio of 36.7x, is a key consideration. This is significantly higher than the typical sector average for financial services and suggests the market is paying a premium for AJG's growth and quality. The company's impressive 36.7% YoY revenue growth helps contextualize this multiple, but a value investor must weigh whether this growth rate is sustainable to justify such a high earnings multiple. The free cash flow yield of 3.3% is modest, translating to a high P/FCF multiple, which aligns with the premium pricing. For a value investor, the assessment is nuanced: the stock is not cheap on an absolute or sector-relative basis, but the margin of safety to the target price provides a favourable, if not deeply undervalued, entry point assuming the growth trajectory and moat quality are durable. Analysis based on data as of 2024-05-15.
AJG Valuation Metrics
FCF$1.78B
FCF Growth Rate9.21%
EPS Growth (CAGR)9.21%
WACC10.00%
Fair Value Models
Graham Number, PEG-based, and Earnings-based models
View Fair Value →AJG Valuation & Fair Value Analysis
Arthur J. Gallagher & Company (AJG) valuation analysis using multiple fair value methodologies. GoodMoat calculates a blended fair value target using discounted cash flow (DCF) analysis, the Graham Number, and earnings-based valuation models.
The GoodMoat Fair Value target for Arthur J. Gallagher & Company is $275.65. The current stock price is $217.61, suggesting the stock is 26.7% undervalued.
The price-to-earnings (P/E) ratio is 37.40. Price-to-book ratio is 2.40. Price-to-sales ratio is 4.01. Enterprise value to EBITDA is 18.76. PEG ratio is -0.78.
GoodMoat's valuation models include the Graham Number (based on EPS and book value), an earnings-based model (discounted future EPS), and a PEG-adjusted valuation. The three models are averaged to produce a blended fair value estimate. Use these tools alongside the DCF calculator and reverse DCF to form a comprehensive view of Arthur J. Gallagher & Company's intrinsic value.