Arthur J. Gallagher & Co. AJG
Arthur J. Gallagher's acquisition-driven top-line engine remains impressive — FY2025 revenue reached $13.94B with 20.66% YoY growth and Q2 2026 delivered 24% revenue growth with 6% organic — but the bottom line is not keeping pace: diluted EPS fell from $6.53 in FY2024 to $5.75 in FY2025 (-11.94%), free cash flow declined from $2.44B to $1.79B, and total debt stands at $14.0B.
At 42.2x trailing earnings versus a peer median of 12.26x — a 244% premium — the market is pricing in flawless M&A execution that Q2 2026's revenue miss and higher expenses do not fully support. Smart money scores have improved modestly to 0.0675 as of Q2 2026 and insiders remain net sellers by dollar value over the trailing 24 months, reinforcing caution. The franchise is too strong to sell, but the risk/reward at this valuation does not justify adding; hold pending evidence that integration converts into EPS accretion and FCF stabilization.
What could go wrong
- Valuation premium. AJG trades at 42.2x PE versus a peer median of 12.26x and 16.83x EV/EBITDA versus a median of 8.97x, leaving little margin for execution missteps.
- EPS dilution from M&A. Despite 20.66% FY2025 revenue growth, diluted EPS declined 11.94% to $5.75 from $6.53, suggesting acquisition integration is not yet accretive on a per-share basis.
- Leverage and FCF pressure. Total debt rose to $14.0B at FY2025 from $8.32B at FY2023, while free cash flow fell to $1.79B from $2.44B, constraining financial flexibility.
- Insider selling. Over the trailing 24 months, insiders were net sellers by dollar value with net_value of -$6.26M across 225 transactions, despite a positive net share count of 170,097.
What would change my mind
Where this comes from: FMP annual fundamentals + derived_metrics, FY2025 · FMP annual fundamentals + derived_metrics, FY2024–FY2025 · FMP annual fundamentals, FY2024–FY2025 · FMP annual fundamentals, FY2025. Orin's read on AJG; not advice.
Twelve months actual closes to 2026-09-23 · actual filings
50-day average 200-day average · volume below
On file
All AJG filingsLargest holders · 13F Q2 2026
Money flow| Filer | Position | Of fund |
|---|---|---|
| Fmr | $4.3B | 0.2% of fund |
| Vanguard Capital Management | $3.9B | 0.1% of fund |
| Jpmorgan Chase & | $3.3B | 0.2% of fund |
| Capital World Investors | $2.9B | 0.3% of fund |
| Vanguard Portfolio Management | $2.9B | 0.1% of fund |
| State Street | $2.6B | 0.1% of fund |
95 filers · quarter ended Q2 2026 · positions, not flows
Insiders, last 24 months: 236 Form 4 filings, net −$13.8M. Of the 50 on hand, 0 were open-market purchases and 5 sales— the rest are grants, option exercises and tax withholding.
Ask Orin about AJG
Orin answers questions about AJG from its filings, transcripts and numbers — with the source behind every claim. Your own desk starts with 3 free days, card required.
Start 3 free days →Where it trades
| Metric | Now | Own median | Sector |
|---|---|---|---|
| P/E | 37.6× | 42.8× | 21.6× |
| EV/EBITDA | 15.0× | 21.8× | — |
| P/S | 3.74× | 4.80× | — |
| P/B | 2.5× | 4.0× | — |
Its P/E sits 20th percentile of its own last 5 years (−0.91σ from its own mean).
14.5%
free-cash-flow growth every year for 10 years, discounted at 10%, is what today’s price implies — starting from $1.8B of trailing free cash flow. It is an assumption the market is making, not a forecast Orin is making.
What Wall Street published
$285
$225 – $300 · +24% against today's price
- 19 buy or overweight
- 9 hold
- 1 underweight or sell
The analysts’ consensus and their own ratings, not Orin’s. A target is a twelve-month opinion published by the firm that wrote it.
Against the companies it is compared to
| Company | Market cap | P/E | EV/EBITDA | Gross | Net | ROE |
|---|---|---|---|---|---|---|
| AJGArthur J. Gallagher & Co. | $59B | 37.6× | 15.0× | 74.6% | 10.0% | 7% |
| AFLAflac Incorporated | $59B | 12.4× | 8.9× | 53.9% | 26.9% | 16% |
| AONAon plc | $60B | 15.4× | 11.8× | 83.1% | 22.3% | 43% |
| PYPLPayPal Holdings, Inc. | $45B | 9.9× | 6.8× | 45.8% | 14.4% | 24% |
| TRVThe Travelers Companies, Inc. | $75B | 9.5× | 7.4× | 34.7% | 17.0% | 26% |
| WFCWells Fargo & Company | $248B | 11.7× | 15.2× | 64.5% | 17.5% | 13% |
The median is of the 5 peers listed above and nothing else — check it against the column. This company trades 222.0% above it. The peer set is the vendor’s, so a company can appear here that a person would not have chosen.
What it has traded at
What its sector has traded at
Two scales, drawn separately on purpose: a sector median and one company’s multiple are not the same number and putting them on one axis invites a comparison neither series supports.
Discounted cash flow
| Model | Fair value | Against | Computed |
|---|---|---|---|
| Standard DCF | $384 | $221.96 · +73% | 2026-06-10 |
| Levered DCF | $331 | $221.96 · +49% | 2026-06-10 |
The vendor’s intrinsic-value models. Treat them as a low-growth anchor — for a fast grower the market routinely pays well above a DCF. These were computed against the price in the “against” column, not today’s.
Every estimate on one scale
The vertical rule is the current price. Ranges and point estimates are the backend’s, published as they were calculated; an arrow means the estimate sits beyond this scale, and its number is on the right.