It has been about a month since the last earnings report for Brown & Brown, Inc. BRO. Shares have added about 2.6% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Brown & Brown Q2 Earnings Beat, Revenues Improve Y/Y
Brown & Brown reported second-quarter 2017 earnings of $0.49 per share that beat the Zacks Consensus Estimate by 4.3%. However, earnings remained flat year over year.
The quarter witnessed improved revenues, partially offset by a rise in expenses. Nonetheless, the company saw an increase in its commissions and fees.
Including change in estimated acquisition earn-out payables of 3 cents per share, net income came in at 46 cents per share, down 2.1% from the year-ago quarter.
Behind the Headlines
Total revenue amounted to $466.3 million, beating the Zacks Consensus Estimate of $465 million by approximately 0.3%. Also, the top line improved 4.4% year over year riding on higher commissions and fees. Organic revenue growth was 1.6% in the reported quarter.
Commissions and fees rose 4.3% year over year to $464.7 million.
Investment income fell 20% year over year to $0.4 million.
Total expenses increased 6.2% to $358.3 million, owing to a rise in employee compensation and benefits, other operating expenses, depreciation, interest as well as change in estimated acquisition earn-out payables.
Net income before interest, income taxes, depreciation, amortization and change in estimated acquisition earn-out payables (EBITDAC) margin decreased 120 basis points to 32.3%.
Financial Update
Brown & Brown exited the second quarter with cash and cash equivalents of $600.3 million, up 16.4% from the 2016-end level.
Long-term debt of $965.4 million as of Jun 30, 2017 was down 5.2% from $1.0184 billion at the end of 2016.
Dividend Update
In the second quarter, the company’s board of directors announced a quarterly dividend of $0.14 per share.
On Jul 13, 2017, the company’s board approved a quarterly cash dividend of $0.135 per share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter.
Brown & Brown, Inc. Price and Consensus
Brown & Brown, Inc. Price and Consensus | Brown & Brown, Inc. Quote