Key Takeaways
- Brown & Brown shares fell 5% after third-quarter revenue of $1.7 billion missed the $1.76 billion analysts expected.
- Acquisitions drove most of the 7.4% revenue growth, while organic revenue grew just 1.2% as insurance rates cooled.
- The adjusted EBITDAC margin fell to 34.6% from 36.6%, though last year’s quarter included about $29 million of interest income on cash raised for the Accession deal.
- Management expects organic growth to improve in both segments in 2027, and the fourth-quarter report is the next test of that.
Brown & Brown (BRO) shares fell 5% today. The insurance broker released its third-quarter results after Monday’s close, and they came in below Wall Street’s numbers.
Revenue of $1.7 billion missed the $1.76 billion analysts expected, and adjusted EPS of $1.07 missed by a penny.
The bigger issue is how the company grew. Total revenue rose 7.4%. But acquisitions added $156 million of commissions and fees, and organic revenue grew just 1.2%.
CEO J. Powell Brown said in the release that his team won more customers “in spite of a challenging rate environment.”
When insurance prices cool, so do a broker’s commissions.
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The deals are carrying the growth
This isn’t a one-quarter blip, either. Organic revenue grew just 0.3% over the first nine months of 2026. Over the same stretch, total revenue jumped 23.4%, with Accession (the broker Brown & Brown bought last August) in the numbers.
Profitability slipped too. The adjusted EBITDAC margin fell to 34.6% from 36.6%. (Part of that comes from last year’s quarter, which included about $29 million of interest income on cash raised for the Accession deal.)
On Tuesday’s earnings call, Brown said Retail beat the top end of the company’s expectations. Specialty Distribution ran into extra headwinds and fell short of them.
Analysts still see revenue climbing from here.
That works out to about 5% growth in 2027. Accession will be in the full year on both sides of that comparison, so much more of the growth has to come from the existing business than it did this quarter. Management says organic growth will improve in both segments next year, and it raised its Accession synergy targets. But after Specialty’s miss, 5% looks like a high bar.
Cheap for a reason
Brown & Brown traded at 15x forward earnings at Monday’s close, well below its five-year average of 23x.
After today’s drop it’s closer to 14x, not far from May’s low of 12x.
Management clearly thinks that’s cheap. The company bought back $750 million of stock in the first nine months of 2026, $250 million of it in the third quarter.
But a broker growing 1% organically won’t get its old multiple back on promises. My take: the stock stays cheap until organic growth actually picks up, and I’d want to see that happen before buying.
Of course, if Specialty’s problems really were about timing, the fourth-quarter report, likely in late January, could change that quickly.
So what is Brown & Brown stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
