Brown & Brown Posts Upbeat Results in Q2

Brown & Brown (BRO) reported stronger-than-expected Q2 results, topping both earnings and revenue estimates driven by robust organic growth across all four business segments.

Shares of the provider of insurance and reinsurance products and federal program services have gained 23% over the past six months.

Earnings of $0.49 per share jumped 44.1% year-over-year and beat analysts’ expectations of $0.40 per share. (See BRO stock charts on TipRanks)

Revenues came in at $727.3 million and exceeded consensus estimates of $679.46 million, jumping 21.5% year-over-year. The increase in revenues was due to a surge in commissions and fees, which increased 21.3% to $725.9 million, as well as organic revenue growth of 14.7%.

During the quarter, the earnings before interest, taxes, depreciation, amortization, and the change in estimated acquisition earn-out payables (EBITDAC) margin increased by 340 bps to 32.9% versus 29.5% reported in the prior-year quarter.

During the earnings call, management commented that it forecasts business confidence to increase over the coming quarters. However, results could be negatively impacted by labor availability and concerns related to COVID-19.

Following the earnings results, Wells Fargo analyst Elyse Greenspan reiterated a Hold rating and the price target of $54. This implies that shares are fully priced at current levels.

Greenspan forecasts the company to report earnings of $0.71 per share for the third quarter of 2021.

Consensus among analysts is a Moderate Buy based on 3 Buys and 4 Holds. The average Brown & Brown price target of $56.29 implies 3.5% upside potential to current levels.

BRO scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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