Value
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.7 |
| P/S | 7.8 |
| EV/EBITDA | 4.5 |
| Fwd P/E | 8.2 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 14.3x
- ▸PEG: 0.25
BRO · Why this verdict
Why Brown & Brown (BRO) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score6.7/10
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. | ↓Deteriorating |
| 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. | ↑Improving |
| 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.
↓DeterioratingEarnings
- 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.
↑ImprovingMomentum 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
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 8.0 |
| OBV | 1.0 |
| MA position | 6.0 |
| Volume | 2.9 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -5.9%/30d — confirmed downtrend
Sentiment
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 6.1 |
| erm sentiment | 5.0 |
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Negligible insider buying — $164,123 (0.001% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.4 |
| quality rank | 6.1 |
| growth rank | 7.9 |
Technical
3.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.7 |
| support resistance | 1.5 |
| 52w position | 2.6 |
| gap | 5.0 |
Risk (lower is worse)
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.3 |
| days to cover | 4.7 |
| volatility | 4.8 |
| beta | 9.4 |
| debt equity | 7.1 |
Catalyst
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.4 |
| dividend safety | 8.5 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 8 days
- ▸Dividend aristocrat: 0.9% yield
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (4)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:4.3<4.5
- ASYMMETRY:-0.2=NEGATIVE
- DEATH_CROSS:HARD_BLOCK
Warning (2)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
- EARNINGS_PROXIMITY:8d<=14d (soft)
Reward-to-Risk
-0.23
Upside
-3.5%
Downside
15.0%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 65
EdgeCatalyst-Driven — Earnings in 8d with 4/4 beat streak
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: INSIDER:OK. Top dim: Growth at 10.0; weakest: Technical at 3.0. No conviction either direction.
The strongest dimensions are Growth at 10.0, Insider at 7.3, and Quality at 7.0; the weakest are Technical at 3.0, Momentum at 4.3, and Sentiment at 5.4. The V9 engine flagged 3 failed gates with 2 warnings, producing an asymmetric reward-to-risk of -0.23 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consistent Earnings Beat Streak
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Superior Free Cash Flow Conversion
Trip ifFree cash flow as a percentage of net income compresses below 80% for 2 consecutive quarters.
- P3Industry Leading Revenue Growth
Trip ifRevenue growth falls below 15% year-over-year for 2 consecutive quarters.
- P4Price Below 200ma Confirmed Downtrend
Trip ifShare price closes above the 200-day moving average and holds there for more than 20 consecutive trading days.