Brown & Brown (NYSE:BRO) Shares Gap Down Following Weak Earnings

Brown & Brown, Inc. (NYSE:BRO)’s share price gapped down prior to trading on Tuesday following a weaker than expected earnings announcement. The stock had previously closed at $71.08, but opened at $68.00. Brown & Brown shares last traded at $68.4160, with a volume of 943,587 shares trading hands.

The financial services provider reported $1.07 earnings per share for the quarter, missing the consensus estimate of $1.08 by ($0.01). Brown & Brown had a net margin of 17.75% and a return on equity of 13.17%. The firm had revenue of $1.70 billion for the quarter, compared to analysts’ expectations of $1.76 billion. During the same period last year, the firm earned $1.05 earnings per share. Brown & Brown’s revenue for the quarter was up 7.4% compared to the same quarter last year.

Brown & Brown Increases Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Wednesday, November 11th. Shareholders of record on Wednesday, November 4th will be issued a $0.18 dividend. The ex-dividend date of this dividend is Wednesday, November 4th. This is a positive change from Brown & Brown’s previous quarterly dividend of $0.1650. This represents a $0.72 dividend on an annualized basis and a yield of 1.1%. Brown & Brown’s dividend payout ratio is presently 20.82%.

Key Stories Impacting Brown & Brown

Here are the key news stories impacting Brown & Brown this week:

• Positive Sentiment: Reported revenue increased 7.4% year over year to $1.725 billion, while net income attributable to the company rose 5.7% to $240 million. Adjusted diluted EPS increased to $1.07 from $1.05, and nine-month revenue grew 23.4% to $5.3 billion. Brown & Brown third-quarter results
• Positive Sentiment: Management highlighted the addition of approximately 5,000 employees from Accession and the company’s ability to win customers despite a challenging insurance-rate environment, supporting the longer-term acquisition and integration strategy. Brown & Brown financial results
• Neutral Sentiment: Recent insider activity included purchases by two insiders, while institutional positioning was mixed, with 407 investors adding shares and 412 reducing positions in the latest reported quarter. These signals offer limited direction for the immediate earnings reaction.
• Negative Sentiment: EPS of $1.07 missed the $1.08 consensus estimate, and revenue of $1.70 billion fell short of the $1.76 billion expected by analysts. Organic revenue growth was only 1.2% (1.5% including contingents), suggesting reported growth remained heavily dependent on acquisitions. Brown & Brown third-quarter earnings
• Negative Sentiment: Profitability weakened: the adjusted EBITDAC margin fell to 34.6% from 36.6%, and the pretax margin declined to 18.6% from 19.4%. Acquisition and integration costs, amortization and higher earn-out-related expenses are weighing on earnings quality and may keep investors focused on integration execution.

Analysts Set New Price Targets

Several equities research analysts have recently issued reports on BRO shares. UBS Group reissued a “neutral” rating and set a $73.00 target price (up from $65.00) on shares of Brown & Brown in a research note on Wednesday, July 8th. The Goldman Sachs Group lifted their price target on Brown & Brown from $62.00 to $70.00 and gave the company a “neutral” rating in a research note on Wednesday, July 1st. TD Cowen initiated coverage on Brown & Brown in a report on Monday, October 12th. They issued a “buy” rating and a $82.00 price target for the company. Truist Financial set a $90.00 price target on Brown & Brown in a research report on Wednesday, July 29th. Finally, BMO Capital Markets raised their price objective on Brown & Brown from $73.00 to $74.00 and gave the company a “market perform” rating in a report on Wednesday, July 29th. One equities research analyst has rated the stock with a Strong Buy rating, seven have assigned a Buy rating, twelve have given a Hold rating and one has issued a Sell rating to the company. According to data from MarketBeat, Brown & Brown has an average rating of “Hold” and an average price target of $76.00.

Institutional Inflows and Outflows

A number of large investors have recently added to or reduced their stakes in the business. Access Investment Management LLC boosted its position in shares of Brown & Brown by 7.3% during the 3rd quarter. Access Investment Management LLC now owns 17,169 shares of the financial services provider’s stock worth $1,046,000 after purchasing an additional 1,173 shares during the period. Pullen Investment Management LLC grew its stake in shares of Brown & Brown by 101.2% in the third quarter. Pullen Investment Management LLC now owns 35,053 shares of the financial services provider’s stock worth $2,259,000 after acquiring an additional 17,628 shares in the last quarter. Financial Management Professionals Inc. increased its holdings in Brown & Brown by 38,821.4% during the 3rd quarter. Financial Management Professionals Inc. now owns 5,449 shares of the financial services provider’s stock worth $332,000 after purchasing an additional 5,435 shares during the period. Compass Ion Advisors LLC lifted its stake in Brown & Brown by 14.8% in the third quarter. Compass Ion Advisors LLC now owns 11,261 shares of the financial services provider’s stock worth $686,000 after acquiring an additional 1,450 shares during the last quarter. Finally, Trueblood Wealth Management LLC grew its stake in shares of Brown & Brown by 58.3% during the third quarter. Trueblood Wealth Management LLC now owns 13,821 shares of the financial services provider’s stock worth $886,000 after purchasing an additional 5,090 shares in the last quarter. 71.01% of the stock is currently owned by institutional investors and hedge funds.

Brown & Brown Trading Down 3.5%

The firm has a market capitalization of $22.94 billion, a price-to-earnings ratio of 21.63, a PEG ratio of 2.27 and a beta of 0.60. The company has a debt-to-equity ratio of 0.58, a quick ratio of 2.11 and a current ratio of 2.11. The company has a 50-day moving average price of $67.25 and a 200-day moving average price of $67.09.

Brown & Brown Company Profile

Brown & Brown, Inc is an insurance brokerage and risk management company headquartered in Daytona Beach, Florida. The company helps businesses, public entities, individuals and other organizations identify, manage and transfer risk by arranging insurance coverage and providing related advisory services.

Its operations include retail insurance brokerage, national programs, wholesale brokerage and services. Brown & Brown offers property and casualty insurance, employee benefits, personal insurance, surety and other specialized coverage.