Healthy Upside Potential: Brown & Brown Inc. (BRO)

Brown & Brown Inc. (NYSE: BRO) stock fell -1.92% on Friday to $59.24 against a previous-day closing price of $60.40. With 1.49 million shares changed hands, the volume of the stock remained heavier than its average volume of 1.17 million shares. During the session, the Insurance Brokers company that operates in wider Financial sector, reached to the highest price of $60.21 whereas the lowest price it dropped to was $58.76. The 52-week range on BRO shows that it touched its highest point at $74.00 and its lowest point at $52.91 during that stretch. It currently has a 1-year price target of $70.33. With its current market cap of 16.72 billion, BRO has annualized dividend of $0.41 while the current yield stands at 0.69%. Beta for the stock currently stands at 0.81.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of BRO was down-trending over the past week, with a drop of -3.66%, but this was down by -8.93% over a month. Three-month performance surged to 3.40% while six-month performance fell -13.74%. The stock gained 3.21% in the past year, while it has lost -15.71% so far this year. A look at the trailing 12-month EPS for BRO yields 2.16 with Next year EPS estimates of 2.57. For the next quarter, that number is 0.61. This implies an EPS growth rate of 22.70% for this year and 10.41% for next year. EPS is expected to grow by 13.22% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 17.90%.

Float and Shares Shorts:

At present, 277.20 million BRO shares are outstanding with a float of 235.06 million shares on hand for trading. On Jul 14, 2022, short shares totaled 4.13 million, which was 1.46% higher than short shares on Jun 14, 2022. In addition to Mr. J. Powell Brown C.P.C.U., CPCU as the firm’s CEO, Pres & Director, Mr. R. Andrew Watts serves as its Exec. VP, CFO & Treasurer.


Institutional Ownership:

Through their ownership of 75.80% of BRO’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 43.36% of BRO, in contrast to 31.55% held by mutual funds. Shares owned by individuals account for 21.40%. As the largest shareholder in BRO with 9.32% of the stake, The Vanguard Group, Inc. holds 26,336,828 shares worth 26,336,828. A second-largest stockholder of BRO, Select Equity Group LP, holds 18,929,929 shares, controlling over 6.70% of the firm’s shares. BlackRock Fund Advisors is the third largest shareholder in BRO, holding 11,761,533 shares or 4.16% stake. With a 2.45% stake in BRO, the Principal Investors – Mid Cap Fun is the largest stakeholder. A total of 6,920,100 shares are owned by the mutual fund manager. The Vanguard Total Stock Market Index, which owns about 2.36% of BRO stock, is the second-largest Mutual Fund holder. It holds 6,674,026 shares valued at 420.73 million. Vanguard Small Cap Index Fund holds 2.02% of the stake in BRO, owning 5,716,897 shares worth 360.39 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for BRO since 12 analysts follow the stock currently. There are 3 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 8 believe that the stock is worth HOLDING, 1 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With BRO analysts setting a high price target of $75.00 and a low target of $66.00, the average target price over the next 12 months is $70.33. Based on these targets, BRO could surge 26.6% to reach the target high and rise by 11.41% to reach the target low. Reaching the average price target will result in a growth of 18.72% from current levels.


EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. BRO will report FY 2022 earnings on 01/23/2023. Analysts have provided yearly estimates in a range of $2.40 being high and $2.14 being low. For BRO, this leads to a yearly average estimate of $2.31. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Brown & Brown Inc. surprised analysts by $0.03 when it reported $0.51 EPS against a consensus estimate of $0.48. The surprise factor in the prior quarter was $0.02. Based on analyst estimates, the high estimate for the next quarter is $0.65 and the low estimate is $0.58. The average estimate for the next quarter is thus $0.61.

Summary of Insider Activity:

Insiders traded BRO stock several times over the past three months with 0 Buys and 1 Sells. In these transactions, 0 shares were bought while 10,129 shares were sold. The number of buy transactions has increased to 47 while that of sell transactions has risen to 17 over the past year. The total number of shares bought during that period was 2,877,282 while 2,564,364 shares were sold.

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