Arthur J. Gallagher (AJG) Q3 Earnings: Rising Costs To Hurt?
Zacks Investment Research | Oct 23, 2017 10:30PM ET
Arthur J. Gallagher & Co. (NYSE:AJG) is slated to report third-quarter 2017 results on Oct 26, after the market closes. Last quarter, the company delivered a positive earnings surprise of 0.98%. 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. The increase in expenses can restrict operating margin expansion, thereby hurting the company’s overall performance.
Also, with the insurance broker’s string of strategic buyouts, the company has incurred 1 cent per share in integration costs in the soon-to-be-reported quarter.
Nonetheless, Arthur J. Gallagher is likely to report bottom-line growth in the third 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 the third quarter of 2017 is 78 cents that represents an increase of 1.9% from the prior-year quarter.
The company expects adjusted margin at Brokerage segment to be in line with year-ago figure.
Employee benefit consulting operations are likely to have registered organic growth owing to new business opportunities.
Top-line growth likely has been fueled by organic sales as well as strategic mergers and acquisitions. To that end, the Zacks Consensus Estimate with respect to revenues for the third quarter of 2017 is $1.6 billion that represents an increase of 5.1% 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 Original post
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