Brown & Brown (BRO) Up 0.7% Since Last Earnings Report: Can It Continue?
Zacks Investment Research | Aug 20, 2019 09:30PM ET
A month has gone by since the last earnings report for Brown & Brown (BRO). Shares have added about 0.7% 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 its most recent earnings report in order to get a better handle on the important drivers.
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Brown & Brown Q2 Earnings & Revenues Beat, Up Y/Y
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Brown & Brown reported second-quarter 2019 earnings of 32 cents per share, which beat the Zacks Consensus Estimate by 14.3%. The bottom line improved 23.1% year over year.
The results reflect recent acquisitions, improved organic growth and margin expansion.
Behind the Headlines
Adjusted revenues of $575.2 million beat the Zacks Consensus Estimate by 3.3%. Moreover, the top line rose 21.6% year over year on higher commissions and fees plus net investment income. Organic revenues increased 3.9% in the reported quarter.
Commissions and fees grew 21.4% year over year to $572.9 million.
Investment income surged 114.3% year over year to $1.5 million.
Total expenses increased 21.4% to $451.7 million, driven by a rise in employee compensation and benefits as well as other operating expenses and interest expense.
EBITDAC was $168.6 million, up 22.4% year over year. EBITDAC margin expanded 20 basis points year over year to 29.3%.
Financial Update
Brown & Brown exited the second quarter of 2019 with cash and cash equivalents of $814.8 million, up 4.8% from 2018-end level.
Long-term debt of $1.4 billion as of Jun 30, 2019 was down 2% from 2018 end.
Net cash provided by operating activities in the first six months of 2019 was $305.7 million, up 10.2% year over year.
Dividend Update
The company paid cash dividend of 8 cents per share in the second quarter.
Acquisition Update
Brown & Brown closed four acquisitions in the reported quarter.
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How Have Estimates Been Moving Since Then?
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It turns out, estimates review flatlined during the past month.
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VGM Scores
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Currently, Brown & Brown has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
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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.
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Outlook
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Brown & Brown has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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