Brown & Brown, Inc.

BRO

Insurance Agents, Brokers & Service

Mkt Cap

$22.87B

PE

26.68

Debt

$4.364B

Cash

$2.303B

EV

$24.93B

FCF

$940.6M

Market Cap

$22.87B

P/E Ratio

26.68

Debt

$4.364B

Cash

$2.303B

EV

$24.93B

FCF

$940.6M

Charts data: {"Earnings":[{"time":"2014-12-30","value":201710000},{"time":"2015-12-30","value":237623000},{"time":"2016-12-30","value":250786000},{"time":"2017-12-30","value":389884000},{"time":"2018-12-30","value":335958000},{"time":"2019-12-30","value":385641000},{"time":"2020-12-30","value":465286000},{"time":"2021-12-30","value":574162000},{"time":"2022-12-30","value":659100000},{"time":"2023-12-30","value":857200000}],"Sales":[{"time":"2014-12-30","value":1575796000},{"time":"2015-12-30","value":1660509000},{"time":"2016-12-30","value":1766629000},{"time":"2017-12-30","value":1881347000},{"time":"2018-12-30","value":2014246000},{"time":"2019-12-30","value":2392171000},{"time":"2020-12-30","value":2613375000},{"time":"2021-12-30","value":3051398000},{"time":"2022-12-30","value":3573400000},{"time":"2023-12-30","value":4257100000}],"Net Margins":[{"time":"2014-12-30","value":0.12800514787447106},{"time":"2015-12-30","value":0.14310250652059098},{"time":"2016-12-30","value":0.14195736626082783},{"time":"2017-12-30","value":0.20723662354685232},{"time":"2018-12-30","value":0.1667909480768486},{"time":"2019-12-30","value":0.1612096292447321},{"time":"2020-12-30","value":0.17804027359257665},{"time":"2021-12-30","value":0.1881635892794057},{"time":"2022-12-30","value":0.18444618570549057},{"time":"2023-12-30","value":0.2013577317892462}],"Assets":[{"time":"2014-12-30","value":4956458000},{"time":"2015-12-30","value":5012739000},{"time":"2016-12-30","value":5287343000},{"time":"2017-12-30","value":5747550000},{"time":"2018-12-30","value":6688668000},{"time":"2019-12-30","value":7622821000},{"time":"2020-12-30","value":8966492000},{"time":"2021-12-30","value":9795443000},{"time":"2022-12-30","value":13973500000},{"time":"2023-12-30","value":14883400000}],"Stockholders Equity":[{"time":"2014-12-30","value":2113745000},{"time":"2015-12-30","value":2149776000},{"time":"2016-12-30","value":2360211000},{"time":"2017-12-30","value":2582699000},{"time":"2018-12-30","value":3000568000},{"time":"2019-12-30","value":3350279000},{"time":"2020-12-30","value":3754223000},{"time":"2021-12-30","value":4196893000},{"time":"2022-12-30","value":4606600000},{"time":"2023-12-30","value":5578800000}],"ROE":[{"time":"2014-12-30","value":0.09542778338919784},{"time":"2015-12-30","value":0.1105338416653642},{"time":"2016-12-30","value":0.10625575425247998},{"time":"2017-12-30","value":0.15095990667127684},{"time":"2018-12-30","value":0.11196480133094801},{"time":"2019-12-30","value":0.11510712988380968},{"time":"2020-12-30","value":0.12393669742047822},{"time":"2021-12-30","value":0.13680644228956992},{"time":"2022-12-30","value":0.14307732383970825},{"time":"2023-12-30","value":0.15365311536531154}],"ROA":[{"time":"2014-12-30","value":0.07427824466584808},{"time":"2015-12-30","value":0.08813684494644544},{"time":"2016-12-30","value":0.08756382931843083},{"time":"2017-12-30","value":0.08491235395951319},{"time":"2018-12-30","value":0.07520809823420747},{"time":"2019-12-30","value":0.07734525053126658},{"time":"2020-12-30","value":0.07618051741974453},{"time":"2021-12-30","value":0.07787529364419761},{"time":"2022-12-30","value":0.06269724836297277},{"time":"2023-12-30","value":0.07700525417579317}]}

Brown & Brown, Inc. markets and sells insurance products and services in the United States, Canada, Ireland, the United Kingdom, and internationally. It operates through four segments: Retail, National Programs, Wholesale Brokerage, and Services. The Retail segment provides property and casualty, employee benefits insurance products, personal insurance products, specialties insurance products, risk management strategies, loss control survey and analysis, consultancy, and claims processing services. It serves commercial, public and quasi-public entities, professional, and individual customers. The National Programs segment offers professional liability and related package insurance products for dentistry, legal, eyecare, insurance, financial, physicians, real estate title professionals, as well as supplementary insurance products related to weddings, events, medical facilities, and cyber liabilities. This segment also provides public entity-related and specialty programs through a network of independent agents; and program management services for insurance carrier partners. The Wholesale Brokerage segment markets and sells excess and surplus commercial and personal lines insurance through independent agents and brokers. The Services segment offers third-party claims administration and medical utilization management services in the workers' compensation and all-lines liability arenas, Medicare Set-aside, Social Security disability, Medicare benefits advocacy, and claims adjusting services. Brown & Brown, Inc. was founded in 1939 and is headquartered in Daytona Beach, Florida.

Sector

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10-Q
3/31/18
10-K
12/31/17

DCF

Discounted Cash Flow Valuation of Brown & Brown, Inc.

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$940.6M	$1.067B	$1.201B	$1.34B	$1.483B	$1.627B	$1.77B	$1.908B	$2.039B	$2.16B	$2.269B	$22.69B
DCF		$928.1M	$908.2M	$881.2M	$847.9M	$808.9M	$765M	$717.3M	$666.7M	$614.1M	$560.7M	$5.607B
Value	$13.31B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 16%

Earnings Stability 94%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is high enough to offer a good protection on the profits in case of higher costs or higher interests. Furthermore higher margins reduce earnings’ volatility.

Over time the ROA has been decreasing indicating a lower marginal ROA with respect to the calculated one, this could impede growth.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Net Margin	14%	14%	21%	17%	16%	18%	19%	18%	20%	20%
ROA	8.8%	8.8%	8.5%	7.5%	7.7%	7.6%	7.8%	6.3%	7.7%	7.7%
ROE	11%	11%	15%	11%	12%	12%	14%	14%	15%	15%

What is the average Net Margin?

The average Net Margin over the past 5 years is +18%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is +0.72%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +7.44%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is -0.1%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +13.08%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is +0.87%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

The company has high debt with respect to the cashflow it generates.

The Graham’s stability indicate reliability of earnings, and consideration about the future are more dependable.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Debt FCF	3.12	3.16	2.62	2.96	2.66	3.33	2.30	5.06	4.64	4.64
Debt Equity	0.57	0.48	0.42	0.52	0.48	0.58	0.49	0.91	0.78	0.78
MIN
Graham Stability	-	-	100%	100%	100%	100%	100%	100%	100%	100%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 4.64.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is 0.42.

What is the Graham’s Stability?

Graham’s Stability measure stands at 1.00.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has been increasing in past years.

Years	12-2016	12-2018	12-2020	12-2022	Trend
Revenue	13%	16%	18%	19%	1.8%
Net Income	19%	21%	23%	30%	0.79%
Stockholders Equity	13%	13%	14%	21%	1.3%
FCF	15%	12%	13%	13%	0.75%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +16.14%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is +1.83%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is +20.6%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is +0.79%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +13.21%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is +1.3%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is +12.33%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is +0.75%.