Shares of Brown & Brown, Inc. BRO have lost 37.3% in the past year compared with the industry’s 27.9% decline.
The decline reflects slowing organic revenue growth, margin pressure from higher expenses, valuation compression, and concerns that a softer insurance pricing environment could slow premium and commission growth. Despite these factors, the company's strong client retention, new business generation and acquisitions remain intact. Recovery depends on improving earnings growth, stronger insurance market conditions and margin stabilization.
Shares of other insurers like Aon plc. AON, Arthur J. Gallagher & Co. AJG and Willis Towers Watson Public Limited Company WTW have lost 0.8%, 19.7% and 6.3%, respectively, over the past year.
1-Year Price Performance - BRO, AON, AJG, WTW & Industry
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BRO’s Average Target Price Suggests Upside
Based on short-term price targets offered by 16 analysts, the Zacks average price target is $74.25 per share. The average suggests a potential 9.7% upside from the last closing price.
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BRO’s Valuation
Shares of Brown & Brown are trading at a discount compared with the Zacks Brokerage Insurance industry. Its forward price-to-earnings multiple of 14.39X is lower than the industry average of 16.35X. It currently carries a Value Score of C.
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BRO’s Growth Projection
The Zacks Consensus Estimate for Brown & Brown’s 2026 earnings per share (EPS) indicates a year-over-year increase of 5.9%. The consensus estimate for revenues is pegged at $7.10 billion, implying a year-over-year improvement of 20.3%. The consensus estimate for 2027 EPS and revenues indicates increases of 8.2% and 5.2%, respectively, from the corresponding 2026 estimates.
Earnings have grown 19.2% in the past five years, better than the industry average of 13.9%. The expected long-term earnings growth rate is 4.8%.
Muted Analyst Sentiment on BRO
The Zacks Consensus Estimate for 2026 earnings remained unchanged, while 2027 earnings moved 0.2% south in the last 30 days.
Factors That Benefit BRO
Commissions and fees, the main component of the top line, benefit from increasing new business, strong retention, and ongoing rate rises across most lines of coverage, supporting recurring revenue and earnings visibility. The company surpassed its intermediate annual revenue target of $4 billion in 2024 and now targets $8 billion in revenues. Last year, its revenues reached $5.9 billion. Additionally, strong contingent commission income supports earnings growth, with contingent commissions increasing $54 million in the first quarter of 2026, including a $22 million contribution from the Accession acquisition.
Brown & Brown’s strategic buyouts help it capitalize on growing market opportunities, strengthen its products and service portfolio, expand global reach and accelerate growth rate. From 1993 through the first quarter of 2026, Brown & Brown acquired 725 insurance intermediary operations. Brown & Brown's growth continues to be driven by the successful integration of the Accession acquisition, which significantly expanded the company's scale and contributed approximately $445 million in first-quarter revenues, helping total revenues rise 35.4% year over year.
The company operates across Retail and Specialty Distribution businesses, providing broad exposure to multiple insurance markets. Revenues from the retail segment have contributed a lion’s share to the company’s total revenues. In the first quarter of 2026, retail revenues increased 33.4% year over year, while Specialty Distribution revenues rose 40%. The balanced contribution from multiple business lines reduces reliance on any single product line.
The company also benefits from robust cash generation and disciplined capital allocation. While BRO effectively deploys cash towards acquisitions and capital expenditure, it also distributes wealth to shareholders via dividend increases. The company has an annualized dividend growth rate of 13.2% over the past five years.
Headwinds
Brown & Brown has been experiencing rising expenses due to higher employee compensation and benefits, amortization, other operating expenses and interest expense. These factors are creating pressure on margins despite revenue growth.
BRO's expanding international operations expose it to foreign currency, regulatory and economic risks across global markets. Additionally, rising debt levels from acquisition-driven growth are increasing interest expenses.
Profitability metrics also lag industry levels. Brown & Brown’s return on equity is 12.9%, well below the industry average of 18.8%.
Conclusion
BRO’s commission growth, new business, strong retention, strategic buyouts, diversified brokerage platform and impressive dividend history position the company well for growth. Its robust capital position, favorable estimates, and cheap valuation are other positives. However, international expansion risks, unfavorable ROE, rising expenses, and debt levels are the headwinds.
Therefore, it is wise to adopt a wait-and-see approach on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Brown & Brown, Inc. (BRO): Free Stock Analysis Report
Aon plc (AON): Free Stock Analysis Report
Arthur J. Gallagher & Co. (AJG): Free Stock Analysis Report
Willis Towers Watson Public Limited Company (WTW): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).