Research Alert: Arthur J. Gallagher Posts Strong Acquisition-related Revenue Growth In Q1
CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:AJG posted Q1 adjusted EPS of $4.47 versus $3.72 prior year, missing our $4.56 estimate but topping the $4.43 consensus view. Q1 revenue growth of 28% exceeded our 12%-18% forecast, largely driven by acquisitions, though firm-wide organic growth of 5% lagged our 7%-10% forecast. We view AJG as one of the better consolidators in the industry, though growing investor concern exists over execution risks inherent in this acquisition strategy. Management remained upbeat, emphasizing this quarter marked AJG's 24th consecutive quarter of double-digit adjusted EBITDAC growth. Q1 margin performance was mixed, with Brokerage adjusted EBITDAC margins compressing 320 bps to 40.1% primarily due to prior year AssuredPartners financing benefit, while Risk Management margins expanded 130 bps to 21.7%. AJG completed 9 acquisitions worth $59M in Q1 versus 11 deals totaling $101M in the prior year period. We expect acquisitions to remain central to AJG's growth strategy going forward.
