Arthur J. Gallagher (AJG) Q4 Earnings: Rising Costs To Hurt?
Zacks Investment Research | Jan 22, 2018 07:57AM ET
Arthur J. Gallagher & Co. (NYSE:AJG) is slated to report fourth-quarter 2017 results on Jan 25 after the market closes. Last quarter, the company delivered a positive earnings surprise of 3.85%.
Let’s see how things are shaping up for this announcement.
Factors to be Considered This Quarter
Arthur J. Gallagher is likely to witness a noticeable rise in expenses, primarily due to higher compensation and operating expenses. This increase in expenses can restrict operating margin expansion, thereby hurting the company’s overall performance.
Also, with the insurance broker’s slew of strategic buyouts, the company has incurred one cent per share as integration costs in the soon-to-be-reported quarter.
Nonetheless, Arthur J. Gallagher is likely to report bottom-line growth in the fourth quarter, mainly owing to a strong performance by its Brokerage and Risk Management businesses as well as higher revenues. In fact, the Zacks Consensus Estimate for fourth-quarter 2017 earnings is pegged at 75 cents per share, representing a rally of 13.6% from the prior-year quarter.
Additionally, the company anticipates improved organic growth at its Brokerage segment in the period. To top it all, the company expects an impact from forex with a tailwind of about $10 million to its brokerage segment revenues in the fourth quarter.
Employee benefit consulting operations are estimated to have registered organic growth on new business opportunities.
Top-line growth has likely been fueled by organic sales as well as strategic mergers and acquisitions. To that end, the Zacks Consensus Estimate for the fourth quarter of 2017 is $1.5 billion, representing an increase of 7.1% from the prior-year quarter.
Earnings Whispers
Our proven model does not conclusively show that Arthur J. Gallagher is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Zacks Investment Research
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