A Look At Brown & Brown (BRO) Valuation As Analyst Downgrades Highlight Softer Insurance Market

Simply Wall St.

Jan 14

Recent analyst actions around Brown & Brown (BRO) have turned attention to how a softening property and casualty insurance market could influence the company’s organic growth expectations, margins, ...

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See our latest analysis for Brown & Brown. Brown & Brown’s recent analyst downgrades and concerns about softer property and casualty pricing sit against a share price of US$79.61, with a 90 day share price return of a 16% decline and a 1 year total shareholder return of a 21.87% loss. The 5 year total shareholder return of 77.83% suggests longer term holders have still seen substantial gains, so momentum appears weaker in the near term compared with the longer history. If you are weighing up what to do next after this softer patch, it could be a good time to see how other insurers are positioned through healthcare stocks. With the share price under pressure, revenue and net income growth still positive, and analysts trimming expectations, the key question is simple: is Brown & Brown now undervalued, or is the market already factoring in its future growth? AdvertisementMost Popular Narrative: 13.7% Undervalued Compared with Brown & Brown’s last close of US$79.61, the most followed narrative points to a fair value in the low US$90s. This frames current weakness as a potential valuation gap rather than a permanent reset. Strong cash flow from operations, combined with a strategic focus on leveraging a diversified portfolio across geographies and lines of business, positions the company to navigate economic uncertainties and potentially increase future earnings stability and growth. Read the complete narrative. Curious what has to happen for that higher value to stack up? This narrative leans heavily on faster top line growth, resilient margins and a rich future earnings multiple. Want to see how those ingredients fit together and what discount rate is used to justify them? Read on to see the full playbook behind this fair value. The most popular narrative applies a discount rate of 6.96% and projects Brown & Brown’s future cash generation out over several years, then brings those cash flows back to today’s terms to arrive at a fair value near US$92 per share. Those assumptions sit alongside expectations for healthy revenue growth, slightly lower profit margins over time and a future P/E that remains above the broader US insurance peer group. Together, these factors help explain why the narrative arrives at a fair value above the current share price. Result: Fair Value of $92.29 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, this depends on economic conditions and regulation cooperating. Slower revenue growth or unfavorable legislative changes could both quickly challenge the optimistic fair value case. Find out about the key risks to this Brown & Brown narrative. Another View: Richer Valuation On Earnings The 13.7% DCF style undervaluation appears inconsistent with the earnings picture. Brown & Brown trades on a P/E of 27.5x, roughly double the US Insurance industry at 12.9x and well above its own fair ratio of 16.4x, which indicates potential valuation risk if sentiment cools. See what the numbers say about this price — find out in our valuation breakdown. NYSE:BRO P/E Ratio as at Jan 2026 Build Your Own Brown & Brown Narrative If you are not fully aligned with these views or prefer to weigh the data yourself, you can shape a custom thesis in minutes with Do it your way. A great starting point for your Brown & Brown research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision. Looking for more investment ideas? Do not stop with a single insurance stock. Widen your watchlist now so you are not kicking yourself later for missing other clear opportunities.  Spot early movers by checking out these 3536 penny stocks with strong financials that already have financial strength to back up their potential. Consider technology-focused opportunities by scanning these 25 AI penny stocks where artificial intelligence sits at the core of the business model. Focus on price versus fundamentals with these 883 undervalued stocks based on cash flows that screen for companies priced below their cash flow estimates.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.Valuation is complex, but we're here to simplify it.Discover if Brown &amp; Brown might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"}}}