BRO Stock Trading at a Discount to Industry at 15.04X: Time to Hold?

Shares of Brown & Brown, Inc. BRO are trading at a discount compared with the industry. Its forward 12-month price-to-earnings multiple of 15.04X is lower than the industry average of 16.51X.

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The insurer has a market capitalization of $23.96 billion. The average volume of shares traded in the last three months was 2.92 million.

Shares of other insurance brokers like Aon plc AON and Arthur J. Gallagher & Co. AJG are trading at a premium, while Willis Towers Watson Public Limited Company WTW is trading at a discount.

BRO’s Price Performance

Shares of Brown & Brown have gained 27.4% in the past three months compared with the industry’s 22.4% growth.

Shares of other insurance brokers like AON, AJG and WTW have gained 11.8%, 29.3% and 37.5%, respectively, over the past three months.

3-Month 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 $76.44 per share. The average suggests a potential 7.6% upside from the last closing price.

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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 5.6%. The consensus estimate for revenues is pegged at $7.04 billion, implying a year-over-year improvement of 19.2%.

The consensus estimate for 2027 EPS and revenues indicates increases of 8.1% and 5.3%, 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 4.5%.

Muted Analyst Sentiment on BRO

The Zacks Consensus Estimate for 2026 and 2027 earnings moved 0.2% and 0.4% south, respectively, 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, improving sales momentum and ongoing rate rises across most lines of coverage, supporting recurring revenues and earnings visibility. Commissions and fees increased 32.4% year over year to $1.65 billion in the second quarter of 2026. Additionally, strong contingent commission income supports earnings growth, with contingent commissions increasing $40 million in the second quarter of 2026, including a $24 million contribution from the Accession acquisition.

Brown & Brown’s strategic acquisitions strengthen its product portfolio, expand its reach and support growth. The company completed six small agency acquisitions during the second quarter, while the Accession acquisition contributed approximately $410 million to second-quarter 2026 revenues. BRO expects $30-$40 million in synergies in 2026, with the integration of approximately 5,500 new employees further strengthening its capabilities and cross-selling opportunities.

The company operates across Retail and Specialty Distribution businesses, providing broad exposure to multiple insurance markets. In the second quarter of 2026, Retail revenues increased 35.9% year over year, while Specialty Distribution revenues rose 28.1%. Management expects organic growth to improve in both segments in the second half, with Retail growth excluding contingents at 1.5-2.5% and Specialty Distribution growth at 2-4%. Favorable casualty pricing and strong demand for risk-management and employee-benefits services should support growth.

Artificial intelligence (AI) and technology investments could provide an additional long-term catalyst. Partnerships with Anthropic, McKinsey and Accenture are expected to accelerate AI adoption across sales, placement, underwriting and support functions.

BRO is also benefiting from strong cash generation and shareholder-friendly capital allocation. Operating cash flow reached approximately $610 million in the first half of 2026, up 13% year over year. The company repurchased approximately $500 million of stock during the first six months. It also plans to continue balancing capital deployment among share repurchases, debt reduction, organic investments and selective acquisitions.

BRO's 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.

As of June 30, 2026, long-term debt rose 1.2% to $7.76 billion, while interest expense surged 96.1% to $100 million, weighing on financial flexibility.

BRO's expanding international operations expose it to foreign currency, regulatory and economic risks across global markets.

Conclusion

BRO’s commission growth, new business, strong retention, strategic buyouts, diversified brokerage platform and balanced capital deployment position the company well for growth. Its robust capital position, AI and technology investments, favorable estimates and cheap valuation are other positives. However, international expansion risks, rising expenses, muted analyst sentiment 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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This article originally published on Zacks Investment Research (zacks.com).

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