We came across a bullish thesis on Brown & Brown, Inc. on The Steady Investing’s Substack. In this article, we will summarize the bulls’ thesis on BRO. Brown & Brown, Inc.’s share was trading at $69.53 as of February 12th. BRO’s trailing and forward P/E were 21.21 and 14.24 respectively according to Yahoo Finance.
Insurance house, car and family health live concept. The insurance agent presents the toys that symbolize the coverage.
Brown & Brown, Inc. (BRO) is the sixth-largest independent insurance brokerage in the U.S., operating primarily as an intermediary between insurers and customers, offering property and casualty, employee benefits, personal insurance, and write-your-own flood insurance through its FEMA-backed subsidiary, Wright National Flood. The company generates over 90% of its revenue in the U.S. and has a low-capex, high-margin, recurring revenue model, with more than 80 years of experience serving businesses and individuals.
Its revenue streams are driven by core commissions (~70%), fee income (~26%), profit-sharing contingent commissions (~2–3%), and a small portion from investment income. Brown & Brown’s segments include Retail (58% of revenue, ~31% EBITDAC margin), National Programs (24%, ~40% margins), Wholesale (13%, ~31% margins), and Services (5%, ~19% margins). The firm’s lean, decentralized structure, entrepreneurial culture, middle-market focus, scale benefits, and serial acquisition strategy underpin a durable competitive advantage, enabling stable cash flows and high margins.
Management alignment is strong, with the Brown family and employees owning ~60% of shares and executives required to maintain meaningful equity stakes. Over the past decade, revenue grew at a 13% CAGR, EPS at 15% CAGR, and free cash flow at 14% CAGR, with gross and net margins significantly above industry averages, while net debt/EBITDA remains manageable at 2x. Capital allocation prioritizes acquisitions, debt reduction, share buybacks, and dividends, achieving a 5-year ROIC excluding goodwill of ~16%.
With future guidance indicating ~23% revenue growth and EPS growth of 10–15% in 2026, the stock is trading below intrinsic value, offering an attractive entry point. Brown & Brown is a high-quality, serially acquisitive compounder with a strong moat, resilient growth, and potential upside of ~40% to a target price of $110, making it a compelling buy for long-term investors.
Previously, we covered a bullish thesis on Brown & Brown, Inc. (BRO) by Bulls On Parade in April 2025, which highlighted its disciplined acquisitions, strong organic growth, high-margin brokerage model, and consistent dividends. BRO’s stock price has depreciated by approximately 41.50% since our coverage due to analyst downgrades and more cautious outlook. The Steady Investing shares a similar perspective but emphasizes segment-level profitability, low-capex recurring revenue, and future growth guidance.
Brown & Brown, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held BRO at the end of the third quarter which was 60 in the previous quarter. While we acknowledge the risk and potential of BRO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BRO and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
