Value
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 6.5 |
| P/S | 8.0 |
| EV/EBITDA | 5.1 |
| Fwd P/E | 8.8 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 12.7x
- ▸PEG: 0.22
- ▸Attractively valued
BRO · Why this verdict
Why Brown & Brown (BRO) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictBUY WAIT
Overall score6.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Brown & Brown has delivered four consecutive earnings beats on the back of strong margins and exceptional free cash flow conversion, but the shares are trading in a confirmed downtrend below the 200-day moving average—making the quality story intact but the near-term entry timing challenged.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has delivered four consecutive quarterly earnings beats with an average positive surprise of approximately 5.8%, indicating a sustained pattern of consistently under-promising and over-delivering on results. Earnings | Continued positive EPS surprises and upward analyst estimate revisions over the next 12 months. | →Stable |
| CounterA prolonged beat streak can reflect a low consensus bar rather than genuine earnings momentum; as estimates adjust higher, the surprise buffer narrows and a single miss could reset investor sentiment sharply. | ||
Free cash flow equals roughly 133% of net income, signaling that reported earnings materially understate the cash the business actually generates—a hallmark of high earnings quality supported by an 18% operating margin and a strong financial health scorecard. Quality breakdown | Free cash flow conversion remains above 100% of net income for the next four fiscal quarters. | →Stable |
| CounterIf working capital dynamics shift or capital requirements increase, the premium cash conversion could compress toward or below net income, eroding the quality signal embedded in the current assessment. | ||
Revenue is growing at 36% year-over-year, placing this company among the leading growers in its industry peer group and supporting continued multiple resilience as long as that trajectory holds. Growth breakdown | Revenue growth remains above 20% year-over-year for at least two consecutive quarters over the next 12 months. | →Stable |
| CounterA portion of the growth may be acquisition-driven rather than organic; if deal activity slows, organic growth could revert toward industry-average levels, removing the premium growth justification. | ||
The share price is trading below its 200-day moving average with that trend line declining at approximately 7.2% over the past 30 days, confirming a near-term technical headwind that complicates fresh entry timing regardless of the quality of the underlying business. Momentum breakdown | The share price reclaims and holds above the 200-day moving average for more than 20 consecutive trading days, signaling the downtrend has reversed. | →Stable |
| CounterStrong fundamental momentum—four straight earnings beats, rising estimates, and high cash conversion—can reassert itself quickly if a catalyst triggers sector rotation back into financials, potentially leaving technical confirmation chasers behind. | ||
The company has delivered four consecutive quarterly earnings beats with an average positive surprise of approximately 5.8%, indicating a sustained pattern of consistently under-promising and over-delivering on results.
→StableEarnings
- Expectation
- Continued positive EPS surprises and upward analyst estimate revisions over the next 12 months.
CounterA prolonged beat streak can reflect a low consensus bar rather than genuine earnings momentum; as estimates adjust higher, the surprise buffer narrows and a single miss could reset investor sentiment sharply.
Free cash flow equals roughly 133% of net income, signaling that reported earnings materially understate the cash the business actually generates—a hallmark of high earnings quality supported by an 18% operating margin and a strong financial health scorecard.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 100% of net income for the next four fiscal quarters.
CounterIf working capital dynamics shift or capital requirements increase, the premium cash conversion could compress toward or below net income, eroding the quality signal embedded in the current assessment.
Revenue is growing at 36% year-over-year, placing this company among the leading growers in its industry peer group and supporting continued multiple resilience as long as that trajectory holds.
→StableGrowth breakdown
- Expectation
- Revenue growth remains above 20% year-over-year for at least two consecutive quarters over the next 12 months.
CounterA portion of the growth may be acquisition-driven rather than organic; if deal activity slows, organic growth could revert toward industry-average levels, removing the premium growth justification.
The share price is trading below its 200-day moving average with that trend line declining at approximately 7.2% over the past 30 days, confirming a near-term technical headwind that complicates fresh entry timing regardless of the quality of the underlying business.
→StableMomentum breakdown
- Expectation
- The share price reclaims and holds above the 200-day moving average for more than 20 consecutive trading days, signaling the downtrend has reversed.
CounterStrong fundamental momentum—four straight earnings beats, rising estimates, and high cash conversion—can reassert itself quickly if a catalyst triggers sector rotation back into financials, potentially leaving technical confirmation chasers behind.
Per-dimension breakdown
Quality
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.0 |
| ROA | 3.7 |
| Gross margin | 6.7 |
| Op margin | 10.0 |
| Net margin | 9.2 |
| Current ratio | 4.1 |
| FCF quality | 9.4 |
| Moat | 7.1 |
| Piotroski F | 8.9 |
- ▸Strong margins: 18%
- ▸Excellent cash conversion: 133% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
10.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
| EPS growth | 10.0 |
- ▸Strong growth: 36% YoY
Momentum
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.2 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -6.8%/30d — confirmed downtrend
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 7.3 |
| erm sentiment | 6.3 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider buying — $164,123 (0.001% of mkt cap)
Peer rank
4.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.9 |
| quality rank | 4.8 |
| growth rank | 8.2 |
- ▸Industry growth leader
Technical
2.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.1 |
| support resistance | 1.2 |
| 52w position | 0.9 |
| gap | 6.0 |
Risk (lower is worse)
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.8 |
| days to cover | 6.1 |
| volatility | 5.6 |
| put call | 5.6 |
| implied vol | 5.3 |
| max pain risk | 3.0 |
| beta | 9.3 |
| debt equity | 7.1 |
- ▸Above max pain $45
Catalyst
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.4 |
| dividend safety | 7.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 104.0%
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more. | News modifier +1 (HOLD_IF_HOLDING → STRONG_BUY_WAIT).
Engine technical detail
verdict_path:
L4:PATH_F_HOLD|L3:NEWS_MOD=+1|ENTRY_STICKY:PRIOR_STILL_VIABLEPassed (6)
- MOMENTUM:5.8>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:32d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.5<1.5@spot
Warning (2)
- DEATH_CROSS:momentum=5.8>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.45
Upside
+4.8%
Downside
10.5%
Sizing output
STARTER
SetupRECOVERY — Death cross but MACD improving, RSI 68
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.8>=5.5. Top dim: Growth at 10.0; weakest: Technical at 2.3. No conviction either direction.
The strongest dimensions are Growth at 10.0, Value at 7.4, and Quality at 7.0; the weakest are Technical at 2.3, Peer rank at 4.5, and Insider at 5.0. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.45 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The company has delivered four consecutive quarterly earnings beats with an average positive surprise of approximately 5.8%, indicating a sustained pattern of consistently under-promising and over-delivering on results.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Free cash flow equals roughly 133% of net income, signaling that reported earnings materially understate the cash the business actually generates—a hallmark of high earnings quality supported by an 18% operating margin and a strong financial health scorecard.
Trip ifFree cash flow as a percentage of net income compresses below 80% for 2 consecutive quarters.
- P3Revenue is growing at 36% year-over-year, placing this company among the leading growers in its industry peer group and supporting continued multiple resilience as long as that trajectory holds.
Trip ifRevenue growth falls below 15% year-over-year for 2 consecutive quarters.
- P4The share price is trading below its 200-day moving average with that trend line declining at approximately 7.2% over the past 30 days, confirming a near-term technical headwind that complicates fresh entry timing regardless of the quality of the underlying business.
Trip ifShare price closes above the 200-day moving average and holds there for more than 20 consecutive trading days.