Is Arthur J Gallagher & Co (AJG) overvalued?
On Equity Rank's model estimate, AJG trades 59% above its fair value. Arthur J Gallagher & Co (AJG) last closed at $281.61; the multi-method model fair value is $177.00.
| Price | Model fair value | Price vs model |
|---|---|---|
| $281.61 | $177.00 | 59% above |
What the answer rests on
- 2 of 12 valuation methods put AJG's value above its price and 10 put it below, so the methods mostly agree.
- To justify today's price, AJG's free cash flow would need to grow about 10.1% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew -2.8% a year.
- AJG trades at 44.0 times its last year's earnings, against a median of 13.0 for 75 profitable Insurance companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 52% above to 100% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind AJG's fair value · What prices assume · Other companies