Brown & Brown (NYSE:BRO) Shares Gap Down Following Weak Earnings

Brown & Brown, Inc. (NYSE:BRO)’s share price gapped down prior to trading on Tuesday following a dissappointing earnings announcement. The stock had previously closed at $71.08, but opened at $68.00. Brown & Brown shares last traded at $68.4160, with a volume of 943,587 shares.

The financial services provider reported $1.07 earnings per share for the quarter, missing analysts’ consensus estimates of $1.08 by ($0.01). Brown & Brown had a return on equity of 13.17% and a net margin of 17.75%. The business had revenue of $1.70 billion during the quarter, compared to analyst estimates of $1.76 billion. During the same period in the previous year, the business earned $1.05 EPS. The firm’s revenue for the quarter was up 7.4% compared to the same quarter last year.

Brown & Brown Increases Dividend

The firm also recently declared a quarterly dividend, which will be paid on Wednesday, November 11th. Shareholders of record on Wednesday, November 4th will be issued a $0.18 dividend. This is a boost from Brown & Brown’s previous quarterly dividend of $0.1650. This represents a $0.72 annualized dividend and a yield of 1.1%. The ex-dividend date of this dividend is Wednesday, November 4th. Brown & Brown’s dividend payout ratio is 20.82%.

Key Stories Impacting Brown & Brown

Here are the key news stories impacting Brown & Brown this week:

• Positive Sentiment: Reported revenue increased 7.4% year over year to $1.725 billion, while net income attributable to the company rose 5.7% to $240 million. Adjusted diluted EPS increased to $1.07 from $1.05, and nine-month revenue grew 23.4% to $5.3 billion. Brown & Brown third-quarter results
• Positive Sentiment: Management highlighted the addition of approximately 5,000 employees from Accession and the company’s ability to win customers despite a challenging insurance-rate environment, supporting the longer-term acquisition and integration strategy. Brown & Brown financial results
• Neutral Sentiment: Recent insider activity included purchases by two insiders, while institutional positioning was mixed, with 407 investors adding shares and 412 reducing positions in the latest reported quarter. These signals offer limited direction for the immediate earnings reaction.
• Negative Sentiment: EPS of $1.07 missed the $1.08 consensus estimate, and revenue of $1.70 billion fell short of the $1.76 billion expected by analysts. Organic revenue growth was only 1.2% (1.5% including contingents), suggesting reported growth remained heavily dependent on acquisitions. Brown & Brown third-quarter earnings
• Negative Sentiment: Profitability weakened: the adjusted EBITDAC margin fell to 34.6% from 36.6%, and the pretax margin declined to 18.6% from 19.4%. Acquisition and integration costs, amortization and higher earn-out-related expenses are weighing on earnings quality and may keep investors focused on integration execution.

Wall Street Analyst Weigh In

BRO has been the subject of several research analyst reports. Truist Financial set a $90.00 price objective on shares of Brown & Brown in a research report on Wednesday, July 29th. TD Cowen began coverage on shares of Brown & Brown in a research note on Monday, October 12th. They set a “buy” rating and a $82.00 price target on the stock. Wells Fargo & Company decreased their price target on shares of Brown & Brown from $69.00 to $68.00 and set an “equal weight” rating for the company in a report on Monday, October 12th. Citizens Jmp dropped their price objective on shares of Brown & Brown from $78.00 to $75.00 and set a “market outperform” rating on the stock in a report on Monday, October 12th. Finally, JPMorgan Chase & Co. boosted their price objective on shares of Brown & Brown from $80.00 to $83.00 and gave the company a “neutral” rating in a report on Thursday, October 1st. One investment analyst has rated the stock with a Strong Buy rating, seven have assigned a Buy rating, twelve have assigned a Hold rating and one has assigned a Sell rating to the company. According to MarketBeat, the company has an average rating of “Hold” and an average price target of $76.00.

Institutional Inflows and Outflows

A number of institutional investors and hedge funds have recently added to or reduced their stakes in the business. BlackRock Inc. purchased a new position in shares of Brown & Brown during the 2nd quarter valued at about $1,418,571,000. Principal Financial Group Inc. grew its holdings in Brown & Brown by 1.6% during the first quarter. Principal Financial Group Inc. now owns 15,608,720 shares of the financial services provider’s stock worth $1,017,847,000 after acquiring an additional 246,172 shares during the period. Deutsche Bank AG acquired a new stake in Brown & Brown during the second quarter worth about $266,941,000. Bank of America Corp DE raised its position in Brown & Brown by 45.2% during the first quarter. Bank of America Corp DE now owns 3,623,179 shares of the financial services provider’s stock valued at $236,268,000 after acquiring an additional 1,128,417 shares in the last quarter. Finally, Royal Bank of Canada raised its position in Brown & Brown by 5.1% during the first quarter. Royal Bank of Canada now owns 3,569,784 shares of the financial services provider’s stock valued at $232,786,000 after acquiring an additional 173,320 shares in the last quarter. 71.01% of the stock is currently owned by institutional investors and hedge funds.

Brown & Brown Stock Performance

The company has a market capitalization of $22.94 billion, a PE ratio of 21.63, a PEG ratio of 2.27 and a beta of 0.60. The firm has a 50-day moving average of $67.25 and a two-hundred day moving average of $67.09. The company has a quick ratio of 2.11, a current ratio of 2.11 and a debt-to-equity ratio of 0.58.

Brown & Brown Company Profile

Brown & Brown, Inc is an insurance brokerage and risk management company headquartered in Daytona Beach, Florida. The company helps businesses, public entities, individuals and other organizations identify, manage and transfer risk by arranging insurance coverage and providing related advisory services.

Its operations include retail insurance brokerage, national programs, wholesale brokerage and services. Brown & Brown offers property and casualty insurance, employee benefits, personal insurance, surety and other specialized coverage.