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Brown & Brown (BRO) Beats on Q4 Earnings and Revenues

Brown & Brown Inc .'s BRO fourth-quarter 2016 earnings per share of 42 cents per share came in a penny above the Zacks Consensus Estimate. Moreover, reported earnings showed a 10.5% year-over-year improvement driven by higher revenues.

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Behind the Headlines

Total revenue in the quarter amounted to $433.6 million, which beat the Zacks Consensus Estimate of $429 million. Also, the top line improved 7.1% year over year on higher commissions and fees. Organic revenue growth was 3.5% in the reported quarter.

Commissions and fees climbed nearly 7.1% to $423.1 million on the back of higher commissions across the four divisions - National Program, Services, Wholesale Brokerage and Retail.

National Program commission grew 5.3%, Services commission increased 12.6%, Wholesale Brokerage commission improved 19.9% and Retail commission rose 4.1%.

Investment income remained flat year over year at $0.3 million.

Total expense increased 9.4% to $338.6 million due to rise in employee compensation and benefits, other operating expenses, and higher interest expenses. The rise in expenses offset top-line improvement, resulting in a 0.2% decrease in pre-tax income to $95 million.

Net income before interest, income taxes, depreciation, amortization and the change in estimated acquisition earn-out payables (EBITDAC) margin contracted 200 basis points to 30.9%.

Brown & Brown, Inc. Price, Consensus and EPS Surprise

Brown & Brown, Inc. Price, Consensus and EPS Surprise | Brown & Brown, Inc. Quote

2016 Highlights

Adjusted earnings per share of $1.86 beat the Zacks consensus Estimate by 3 cents.

Revenues came in at $1.77 billion, up 6.4% year over year.

Financial Update

Brown & Brown exited 2016 with cash and cash equivalents of $781.3 million, up about 16% from year-end 2015.

Long-term debt was $1.018 billion as of Dec 31, 2016, down 5% from $1.071 billion at the end of 2015.

Dividend Update

This Zacks Rank #3 (Hold) company's board of directors declared a quarterly cash dividend of 14 cents per share on Jan 20. The dividend will be paid on Feb 15, to shareholders on record as of Feb 3.

Insurance Stocks Worth a Look

MGIC Investment Corp. MTG reported fourth-quarter 2016 operating net income per share of 28 cents, which outpaced the Zacks Consensus Estimate of 22 cents by 27%.

Radian Group Inc. RDN is a credit enhancement company that supports homebuyers, mortgage lenders, loan servicers and investors with a suite of private mortgage insurance and related risk-management products and services. It is slated to report fourth-quarter results on Jan 26. The Zacks Consensus Estimate is currently pegged at 40 cents. The stock sports Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here

Prudential Financial Inc. PRU offers financial products and services including life insurance, annuities, retirement-related services, mutual funds, investment management and real estate services. It is likely to report fourth-quarter results on Feb 8. The Zacks Consensus Estimate is currently pegged at $2.31. The stock carries Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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