Brown & Brown (BRO) continues to attract attention from investors interested in the insurance sector’s performance and resilience. Recent price movement shows some volatility, which prompts questions around valuation and the company’s recent growth numbers.
See our latest analysis for Brown & Brown.
Brown & Brown’s share price has taken a hit recently, dropping over 18% in the last month after some volatility in the broader insurance sector. While the 1-year total shareholder return sits at -29.7%, the bigger picture shows a strong recovery streak with gains of 41% and 72% over the past three and five years respectively. This reflects momentum that has cooled off lately but has not erased the longer-term growth story.
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With shares trading below analyst targets after recent declines, the key question remains: is Brown & Brown now undervalued, or has the market already accounted for future growth in the current price?
The fair value calculated in the most closely followed market narrative comes in at $97.08, which is significantly above Brown & Brown’s last close at $78.54. This valuation sets an optimistic tone that contrasts with recent price pressure, hinting at substantial upside potential if assumptions hold true.
Brown & Brown’s strategic focus on acquisitions, having completed 13 acquisitions with projected annual revenues of $36 million, could significantly enhance future revenue streams and market presence. This aligns with their goal of sustained revenue growth through expansion.
Read the complete narrative.
Curious about the foundation of this punchy price target? There is a bold set of financial predictions guiding this view, including various growth projections and a premium valuation multiple. This narrative relies on more than just headline numbers. Uncover the blueprint now that drives this aggressive estimate.
Result: Fair Value of $97.08 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, persistent inflation and potential declines in key market segments could challenge Brown & Brown’s growth expectations and dampen the current bullish valuation narrative.
Find out about the key risks to this Brown & Brown narrative.
While the latest fair value estimate paints Brown & Brown as undervalued, looking at price ratios tells a more cautious story. Its price-to-earnings ratio stands at 27.1x, which is quite a bit higher than both the US insurance industry average of 13.2x and its fair ratio of 17.8x. Compared to peers, Brown & Brown looks cheaper than the group average of 47.1x, but against broader market and fair value benchmarks, the stock is on the expensive side. This gap raises questions about what could happen if market sentiment shifts. Will the price come into line, or is there more risk than meets the eye?