Yahoo Finance US$42.40 - That's What Analysts Think Brown & Brown, Inc. Is Worth After These Results
It's been a good week for Brown & Brown, Inc. (NYSE:BRO) shareholders, because the company has just released its latest full-year results, and the shares gained 8.5% to US$45.01. It was a credible result overall, with revenues of US$2.4b and statutory earnings per share of US$1.40 both in line with analyst estimates, showing that Brown & Brown is executing in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
See our latest analysis for Brown & Brown
Taking into account the latest results, the current consensus from Brown & Brown's nine analysts is for revenues of US$2.56b in 2020, which would reflect a modest 7.2% increase on its sales over the past 12 months. Statutory earnings per share are expected to increase 8.2% to US$1.54. Before this earnings report, analysts had been forecasting revenues of US$2.54b and earnings per share (EPS) of US$1.51 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
With analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 8.5% to US$42.40. It looks as though analysts previously had some doubts over whether the business would live up to their expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Brown & Brown analyst has a price target of US$52.00 per share, while the most pessimistic values it at US$34.00. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We can infer from the latest estimates that analysts are expecting a continuation of Brown & Brown's historical trends, as next year's forecast 7.2% revenue growth is roughly in line with 7.8% annual revenue growth over the past five years. Compare this with the wider market, which analyst estimates (in aggregate) suggest will see revenues grow 3.0% next year. So although Brown & Brown is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider market.
The Bottom Line
The most obvious conclusion from these results is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - and our data does suggest that Brown & Brown's revenues are expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Brown & Brown going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether Brown & Brown's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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