4-Star Stocks Poised to Pop: Brown & Brown

Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, insurance company Brown & Brown (NYSE: BRO  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Brown & Brown's business and see what CAPS investors are saying about the stock right now.

Brown & Brown facts

Headquarters (founded)

Daytona Beach, Fla. (1956)

Market Cap

$2.86 billion

Industry

Insurance brokers

Trailing-12-Month Revenue

$950.75 million

Management

CEO J. Powell Brown (since 2009)
CFO Cory Walker (since 2000)

Return on Equity (average, past 3 years)

13.2%

Cash/Debt

$301.15 million / $255.77 million

Dividend Yield

1.5%

Competitors

Aon (NYSE: AON  )
Marsh & McLennan (NYSE: MMC  )
Arthur J. Gallagher (NYSE: AJG  )
Willis Group Holdings (NYSE: WSH  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 91% of the 135 members who have rated Brown & Brown believe the stock will outperform the S&P 500 going forward. These bulls include gbetter and tekennedy.

A few months ago , gbetter described Brown & Brown in purely bullish terms:

[G]reat company in a great industry, low reinvestment needs, superior decentralized mgmt. It is moderately cyclical but has low debt load and will likely take advantage of the soft market by acquiring more local insurance agencies and continuing to build their large network.

Thanks to that decentralized operating system, Brown & Brown sports one of the most motivated, growth-oriented sales cultures in the insurance broker business. In fact, Brown & Brown's operating and net margins are consistently higher than those of rivals Aon, Marsh & McLennan, Arthur J. Gallagher, and Willis Group. While Brown & Brown's shares currently trade at a 52-week high, several CAPS members think it's still safer than being exposed directly to underwriting risks, as is the case with insurance giants such as AIG (NYSE: AIG  ) or ING (NYSE: ING  ) .

CAPS member tekennedy explains:

Strong ROE with ability to grow. ... Current negative industry pricing within insurance companies will dampen performance in near term but its eventual recover should allow earnings to outpace S&P in medium term (with general growth letting it win out long term). Prefer owning this to owning the insurance company itself; I'm not a fan of leverage, especially when a change in the estimations could drastically increase costs and liabilities.

What do you think about Brown & Brown, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.


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