BROWN & BROWN, INC. (BRO): what the price requires

At today's price, BROWN & BROWN, INC. (BRO) is priced for +5.1% earnings growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/BRO

Headline

FieldValue
TickerBRO
CompanyBROWN & BROWN, INC.
Current price$69.01/sh
CompositionBase commissions 67% / Fees 22% / Other supplemental commissions 3% / Profit-sharing contingent commissions 4% / Earned premium 1% / Investment income 2% / Other income, net 0%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisfee-financial
Implied earnings growth5.1%
Price-to-earnings22.4x
Earnings yield4.5%

Solve inputs: computed at a 8.9% cost of equity with 4% terminal growth over a 5-year stage, on the latest fiscal year's GAAP earnings base; each 1pp of cost of equity moves the implied earnings growth ~4.7pp.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.56σ
cohort percentile (of 49 peers)51
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.87x3expensive
Earnings2.08x1expensive
Relative1.23x1expensive
Growth0.81x1justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.8%); the inversion above states its own rate.

Per-Model Detail (n=6)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
Bank Fair Value (P/TBV)—$36.281.90xyesTBVPS $37.36 × 0.97x (ROE (TTM) 9.1% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption))
Relative ValuationRelative$56.321.23xyesP/E 13.77x (blended: static sector reference 11x + trailing (TTM) 20x), scenarios: 11.0x / 13.8x / 16.5x (bear / base = reference held flat / bull), EV/EBITDA 22x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$36.861.87xyesBV/sh $37.36, ROE (TTM) 9.1%, ke 9.3%
Two-Stage Excess ReturnAsset$36.621.88xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$84.950.81xyesRev $6.4B, growth 29% (input: historical growth; tapered), Terminal P/S: 2.9x / 3.6x / 4.4x (bear / base = today's held flat / bull, cap 12x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset——no—
Graham NumberAsset$50.801.36xyes√(22.5 × EPS $3.07 × BVPS $37.36) — Graham's conservative floor
EV/EBITDA RelativeRelative——no—
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$2.5726.85xyesEPS $3.07 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative——no—
PEG Fair ValueRelative——no—
Earnings YieldEarnings$33.192.08xyesEPS $3.07 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$6.8b
Net debt / NOPAT (after-tax)5.37x
Net debt / operating income (pre-tax)4.30x
Interest coverage5.3x
Share count CAGR (dilution)4.9%
Burning cashno

Bullet Takeaways

At about $59, Brown & Brown trades near 19 times earnings, an earnings yield of roughly 5.2%. Inverted, the price asks for only about 1.9% annual fee-earnings growth, a pace that sits within the firm's own record and in the lower half of its insurance-broker peer group. The demand baked into the price is modest, not heroic.

The first quarter of 2026 told two stories at once: total revenue jumped about 35% to $1.9 billion on the Accession acquisition, while organic revenue was flat year over year. The growth is real cash, but it came from buying, not from the existing book expanding.

The balance sheet now carries the cost of that strategy. Net debt sits near $6.8 billion at about 4.3 times operating income after the largest deal in company history, with interest coverage around 4.5 times. The broker model throws off high-margin, recurring commissions, but the leverage is real and the share count has been creeping up to fund the dealmaking.

Bull Case

Look first at where the price sits against the valuation methods, because the spread tells you what the market is and is not asking for. An insurance broker is worth the fee earnings it throws off, not its book value, so the right lens is price-to-earnings, and at roughly 19 times Brown & Brown trades at a 5.2% earnings yield. Invert that and the price embeds only about 1.9% annual fee-earnings growth over the next several years. The relative-valuation read lands closest to the price, near $53 on a blended sector and trailing multiple, while the asset-based and earnings-power methods land lower because book value is not the right frame for a capital-light broker. The point is that the modest growth the price requires is well inside what this firm has delivered, and in the lower half of where its peers trade.

The economics behind that earnings stream are genuinely attractive. Brown & Brown collects base commissions and fees on insurance it places, a recurring, capital-light flow that does not require it to take underwriting risk on its own balance sheet. Base commissions are about two-thirds of revenue and fees another fifth, with contingent and profit-sharing commissions on top when loss experience runs favorable. The adjusted EBITDAC margin reached 38.5% in the first quarter of 2026, up from 38.1% a year earlier, so the core profitability held even as the business absorbed a large acquisition. The 10-K shows the firm has compounded organic revenue at double-digit rates in recent years, "Organic Revenue growth rate 2.8% 10.4%" across the comparison periods (FY2025 10-K, accession 0001193125-26-046984), with employee compensation steady near half of revenue.

The Accession deal is the swing factor on the upside. Completed August 1, 2025 for a gross $9.825 billion, it was the largest acquisition in company history and brought in the ninth-largest privately held U.S. broker, roughly 5,000 professionals and about $1.7 billion in pro forma revenue. The multiple paid looks reasonable at around 12 times with full synergies, and the deal is projected to be accretive to earnings in 2026. If Brown & Brown integrates it the way it has integrated hundreds of smaller deals, the modest growth the price requires becomes a floor rather than a ceiling, and the recurring commission base steps up permanently.

Bear Case

The competitive squeeze on Brown & Brown comes from the firms it competes with for both clients and acquisitions. Arthur J. Gallagher, Ryan Specialty, and the fast-growing Baldwin Insurance Group are all chasing the same mid-market commercial accounts and the same privately held brokers that Brown & Brown rolls up. That competition matters in two ways. On the client side, the largest brokers have scale advantages in carrier relationships and data that pressure the win rate. On the deal side, the bidding for independent agencies has pushed acquisition multiples up across the industry, which is why the Accession deal cost nearly $10 billion. When everyone is buying growth, the price of growth rises, and the returns on each deal compress.

The flat organic number is the tell. First-quarter 2026 revenue rose about 35% to $1.9 billion, but organic revenue was 0.0% year over year, and even with contingent commissions it grew only 2.2%. That is a sharp deceleration from the double-digit organic rates the company posted in prior years, where the 10-K shows organic growth of 10.4% in an earlier comparison period (FY2025 10-K, accession 0001193125-26-046984). A broker whose existing book stops growing is, for that period, simply renting growth from acquisitions. If the soft-organic environment persists, driven by a softening commercial insurance pricing cycle, the headline growth becomes entirely dependent on continuing to do ever-larger deals.

That dependence runs straight into the balance sheet. The Accession acquisition pushed net debt to about $6.8 billion, roughly 4.3 times operating income, with interest coverage near 4.5 times. Goodwill on the balance sheet runs to nearly $7 billion, and the 10-K notes the purchased customer accounts carry a 14-year useful life with significant estimation uncertainty in the carrying values (FY2025 10-K, accession 0001193125-26-046984). The share count has also drifted up around 5% to help fund deals. The model that looks like a high-margin recurring compounder is, underneath, a leveraged serial acquirer. If organic growth stays flat, deal multiples stay high, and the insurance pricing cycle turns down, the price that requires only 1.9% growth could still disappoint, because the growth it does deliver will have been bought with debt and dilution rather than earned.

Valuation

Brown & Brown is a fee-financial business, so the coherent valuation runs off earnings, not book value. A capital-light broker earns commissions and fees without deploying much balance sheet, which is why its book value sits far below its market value and the asset-based methods understate it. At about $59 (June 27, 2026) the price is roughly 19 times earnings, a 5.2% earnings yield, which inverts into an implied fee-earnings growth assumption of about 1.9% a year over a five-year stage at a cost of equity near 8.9%. That is a low bar relative to the firm's own history and places it in the lower half of its insurance-broker peer group on price-to-earnings.

The method spread is consistent with a fairly priced compounder rather than a stretched one. The relative-valuation read lands near $53 on a blended sector and trailing P/E. The earnings-yield method lands near $33 and the excess-return and book-value-floor methods cluster in the mid-$30s, all of which lean on book value or a single-point earnings capitalization and therefore understate a business whose value is its recurring fee stream. A discounted-future-market-cap read that gives credit for revenue growth lands higher, near $44. No method reaches the current price except the relative one, which is the appropriate lens for a broker, so the price is a modest premium to fair rather than a clear overpayment.

The plain read: you are paying about 19 times earnings for a recurring, high-margin commission stream that is currently growing organically at roughly zero but has historically grown at double digits, plus the integration upside of the largest acquisition in company history. The price requires very little organic growth to work. The risk is not that the price is absurd, it is that the leverage taken on to buy growth and a soft organic patch could combine to keep earnings growth near the low bar the price assumes rather than above it.

Catalysts

The dominant event is the Accession integration. Brown & Brown completed the $9.825 billion acquisition of RSC Topco, the parent of Accession Risk Management Group (Risk Strategies and One80), on August 1, 2025, the largest deal in its history, adding roughly 5,000 professionals and about $1.7 billion of pro forma revenue. (Brown & Brown IR, Reinsurance News) The deal is projected to be accretive to 2026 earnings, with the multiple paid around 12 times on full synergies, so the integration milestones over the next several quarters are the key value driver.

The first-quarter 2026 print framed the tension. Total revenue rose 35.4% to $1.9 billion, but organic revenue was flat at 0.0% and organic-with-contingents grew only 2.2%, while net income rose to $426 million from $331 million and the adjusted EBITDAC margin improved to 38.5%. (stocktitan, Insurance Business) Management also used the quarter to highlight an AI push aimed at productivity. The eight smaller tuck-in deals closed in the quarter show the rollup machine is still running alongside the big one.

Watch three things into the back half of 2026: whether organic revenue re-accelerates off the flat first quarter as the commercial insurance pricing cycle and new-business wins develop, the pace of Accession synergy realization and any deleveraging from the elevated debt load, and the cadence of further acquisitions. Analyst sentiment is currently a consensus Hold, so a return to mid-single-digit or better organic growth would be the cleanest catalyst for a re-rating. (public.com)

Peer Cohorts (Per Segment, With Filing Citations)

Retail (reported)

Specialty Distribution (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive BRO report on boothcheck