The third-quarter results for Arthur J. Gallagher & Co. (NYSE:AJG) were released last week, making it a good time to revisit its performance. It was not a great result overall. While revenues of US$2.8b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 15% to hit US$1.39 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Arthur J. Gallagher

Following the latest results, Arthur J. Gallagher's ten analysts are now forecasting revenues of US$12.7b in 2025. This would be a solid 19% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 59% to US$8.50. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$12.8b and earnings per share (EPS) of US$8.50 in 2025. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of US$292, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Arthur J. Gallagher analyst has a price target of US$320 per share, while the most pessimistic values it at US$250. This is a very narrow spread of estimates, implying either that Arthur J. Gallagher is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Arthur J. Gallagher's past performance and to peers in the same industry. It's clear from the latest estimates that Arthur J. Gallagher's rate of growth is expected to accelerate meaningfully, with the forecast 15% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 9.5% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.1% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Arthur J. Gallagher is expected to grow much faster than its industry.