Brown & Brown, Inc. (NYSE:BRO) is an insurance brokerage company that obtains commissions and fees by matching individuals and businesses with insurance carriers. The company’s asset-light business model, its ongoing relationships with clients, and its relatively small exposure to underwriting risk all contribute to steady cash generation. While acquisitions offer a means of expanding the business, their impact must be separated from the underlying organic growth. Brown & Brown is also among the blue-chip stocks investors may want to consider, and you can explore more opportunities in our ranking of the Best Blue Chip Stocks Under $100 to Buy Now.
In 2025, revenue rose by 22.8% to $5.9 billion, with organic revenue increasing by only 2.8%. The most recent quarter’s reported figure supports this difference: in the second quarter of 2026, revenue increased by 30.4% on a year-on-year basis to about $1.7 billion, but organic revenue fell by 0.7%, or rose by only 0.7% when the contingent commissions were taken into account. Adjusted diluted EPS rose 3.9% to $1.07. The headline growth rate thus gives an exaggerated picture of the actual underlying momentum.
Although acquisitions are causing the business to grow, weak organic growth and lower adjusted operating margins indicate that the integration costs, the pricing conditions, and the slower rate of internal expansion should be given attention. The investment case hinges on turning the acquisitions into sustainable earnings growth rather than on relying upon further acquisitions to maintain revenue momentum.
Also read: 10 Oversold Dividend Growth Stocks to Buy
Does Brown & Brown provide a margin of safety?
Brown & Brown, Inc. has a forward P/E of 12.59x, which means that its earnings yield is about 7.94%, this yield being obtained by taking the inverse of the forward multiple. It thus offers a good basis for evaluating the possible return on the share, even though the earnings yield is not the same as a guaranteed return. The trailing P/E is much higher at 19.71x, which shows that analysts expect earnings to rise in comparison with the company’s most recent figures. The fact that there is this gap is reassuring, but it rests on the assumption that the forecast earnings actually occur.
The historical figures also point to a revision in valuation. The forward P/E has dropped from 26.39x in June 2025 to 12.59x, and the trailing multiple has fallen from 30.88x to 19.71x during the same period. The forward multiple is now below the trailing multiple at all points in the last year. This could mean that the market is anticipating a recovery in earnings while at the same time giving the company a lower valuation.
The key issue is whether the lower price multiple indicates an attractive entry point or rather reflects more modest growth expectations. The revenue growth of 22.8% that the company achieved in 2025 was mostly due to acquisitions, with organic growth amounting to only 2.8%. Its adjusted earnings per share in the second quarter of 2026 increased by 3.9%, which shows that earnings growth has not yet kept up with the overall revenue expansion. The forward P/E of 12.59 could thus represent good value if the acquisitions lead to higher earnings and the margins become more stable. However, if organic growth continues to be weak or if integration pressures remain, the market might have a valid reason to keep the multiple low.
The dividend offers only a small amount of income. With an annual dividend of $0.66 per share, the yield works out at about 1.0% on a share price of $63. This represents a minor part of the total return, and so investors have to rely mainly on earnings growth and a recovery in valuation. While the earnings yield is more appealing than the dividend yield, earnings must either be reinvested productively or returned to shareholders to generate value. Still, Brown & Brown’s 33 consecutive years of dividend growth may appeal to investors seeking a growing income stream. Check other dividend growth stocks here.
Conclusion
Forward earnings suggest Brown & Brown is more reasonably valued than its trailing multiple indicates. Investors should look into the discount rather than take it as evidence the stock is undervalued. Investors should verify consensus earnings estimates, compare the forward multiple with those of other insurance brokerage firms, and assess whether organic growth and margins can recover before concluding the stock offers a compelling margin of safety.
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.
READ NEXT: Royal Caribbean Group: Has the Market Already Priced in the Cruise Recovery? and Kraft Heinz Stock Looks Cheap. Here’s What Investors are Missing
This article is originally published at Insider Monkey.
Hedge Fund Resource Center