Is Arthur J. Gallagher Stock Outperforming the Dow?

Rolling Meadows, Illinois-based Arthur J. Gallagher & Co. (AJG) provides insurance and reinsurance brokerage, consulting, and third-party property & casualty claims settlement and administration services to entities and individuals. Valued at a market cap of $82.8 billion, the company offers a broad range of risk management services and assists clients in all areas of their employee health, welfare and retirement plans.

Companies valued at $10 billion or more are typically classified as “large-cap stocks,” and AJG fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the insurance brokers industry. One of its key strengths is its extensive global presence, with operations in over 130 countries, allowing it to serve a diverse range of industries. The company excels in providing tailored risk management solutions, leveraging data analytics and industry expertise to help clients mitigate financial and operational risks. Additionally, Gallagher is recognized for its ethical business practices and commitment to sustainability, reinforcing its reputation as a trusted industry leader.

This financial giant is currently trading nearly 6.9% below its all-time high of $345.43, reached recently on Mar. 4. Shares of AJG have rallied 14.3% over the past three months, significantly outperforming the broader Dow Jones Industrials Average’s ($DOWI) 5.3% decline during the same time frame.

In the longer term, AJG has surged 27.6% over the past 52 weeks, considerably outpacing DOWI’s 6.6% return. Moreover, on a YTD basis, shares of AJG are up 14.9%, compared to DOWI’s 2.5% decline.

To confirm its bullish trend, AJG has been trading above its 200-day moving average since the past year, with slight fluctuations, and has remained above its 50-day moving average since late January.

On Jan. 30, AJG announced its Q4 results, prompting a marginal uptick the following day and an upward streak for the next six trading sessions. The company delivered better-than-expected Q4 adjusted earnings of $2.13 per share and revenue of $2.7 billion, which improved 17% and 12% respectively, from the year-ago quarter. Its core brokerage and risk management segments combined to deliver its 16th consecutive quarter of double-digit revenue growth. Additionally, increased commissions, fees, and supplemental revenues, coupled with stronger EBITDAC played a key role in bolstering the company's performance and driving a positive market reaction.

AJG’s outperformance becomes more evident when compared to its rival, Aon plc (AON), which gained 24.4% over the past 52 weeks and 11% on a YTD basis.

Looking at AJG’s recent outperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 18 analysts covering it, and the mean price target of $328.20 suggests a marginal premium to its current levels.