MeritValue

Arthur J. Gallagher & Co.

AJGdata completeness 100%18 fiscal years on file

Data notes: no data for concept 'investmentsAtFairValue'; no data for concept 'netInvestmentIncome'; no data for concept 'gainsOnRealEstateSales'; no data for concept 'realEstateImpairment'

The thesis, from the filings

Arthur J. Gallagher & Co. earns about 8% on invested capital, below its ~9% cost of capital, but has diluted owners by 26% over 5 years — no moat visible in the numbers. The estimate methods put fair value between $44.67 and $160.52 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$8.21B1$8.55B2$10.1B3$11.6B3$13.9B3
Net income$906.8M4$1.11B5$970M6$1.46B6$1.49B6
Operating cash flow$1.39B7$1.39B8$2.03B9$2.58B9$1.93B9
Capital expenditure$128.6M10$182.7M11$194M12$142M12$145M12
Free cash flow (derived)$1.26B7$1.21B8$1.84B9$2.44B9$1.79B9
Total debt$6.08B13$5.89B14$7.7B15$13B16$25.6B16
Cash & equivalents$402.6M17$738.4M18$971M19$15B19$1.4B19
Diluted shares202.7M210.3M214.9M220.5M256.1M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$910.62
your share of equity
Profit it earned you last year
$58.34
Free cash flow it threw off
$69.7
Debt you’d be carrying
$1,000.27

10 shares is a claim on $910.62 of net worth that earned you $58.34 and generated $69.7 of cash last year, against $1,000.27 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
8% avg · 5y
FY21 8%FY22 9%FY23 7%FY24 10%FY25 4%

It earned about 8% on invested capital against a ~9% cost of capital — below the cost of funding. The numbers show no moat.

seeing a moat in the numbers →
Management signal · capital allocation
+26% shares · 5y

Share count is up 26% over 5 years — owners have been diluted. Worth asking what they got for it. Total debt has risen 321% over the same window.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.5.0

The 3 estimate methods that apply put fair value between $44.67 and $160.52 a share. They rest on different assumptions, so where they diverge is the story; the Graham Number is a stricter floor, not a target.

DCF · Growth Exit 10Y
$160.52
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth13.3%
  • fcfBase$1.84B
DCF · Growth Exit 5Y
$82.58
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth13.3%
  • fcfBase$1.84B
Earnings Power Value
$44.67
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$1.11B
  • growthAssumed0.0%
Graham Number
$108.26
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years13.3%
Discount rate (WACC)9.02%
Terminal growth2.5%
At your growth, a share is worth $82.58
The three cases
Bear0.0%$6.61
Base13.3%$82.58
Bull18.3%$121.37

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 13.3%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0000950170-24-013370 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0000950170-25-021775 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0001628280-26-008662 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0000950170-24-013370 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0000950170-25-021775 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001628280-26-008662 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0000950170-24-013370 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0000950170-25-021775 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001628280-26-008662 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0000950170-24-013370 (PaymentsForCapitalImprovements)
  11. 10-K · period ending 2022-12-31 · accession 0000950170-25-021775 (PaymentsForCapitalImprovements)
  12. 10-K · period ending 2023-12-31 · accession 0001628280-26-008662 (PaymentsForCapitalImprovements)
  13. 10-K · period ending 2021-12-31 · accession 0000950170-23-002456 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2022-12-31 · accession 0000950170-24-013370 (LongTermDebtNoncurrent)
  15. 10-K · period ending 2023-12-31 · accession 0000950170-25-021775 (LongTermDebtNoncurrent)
  16. 10-K · period ending 2024-12-31 · accession 0001628280-26-008662 (LongTermDebtNoncurrent)
  17. 10-K · period ending 2021-12-31 · accession 0000950170-23-002456 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2022-12-31 · accession 0000950170-24-013370 (CashAndCashEquivalentsAtCarryingValue)
  19. 10-K · period ending 2023-12-31 · accession 0001628280-26-008662 (CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents)