Is Brown & Brown Set for Recovery After 29.7% Drop and Key Acquisitions?

Wondering if Brown & Brown is finally offering value after its recent rollercoaster in the market? You are definitely not alone, and it is a question worth exploring in depth. The stock has dipped noticeably this year, with a 21.9% year-to-date return in the negative and a 29.7% drop over the past 12 months, even though it still boasts strong longer-term gains. Recent movement has been shaped by a combination of sector-wide sentiment shifts and news highlighting changes in insurance regulation, which have left many investors reassessing risk and reward. In addition, announcements around strategic acquisitions have put Brown & Brown back in the spotlight, further fueling debate about its prospects. If you are looking for a quick gauge, Brown & Brown currently earns a 2/6 valuation score for being undervalued. Before taking this number at face value, we will dive into the different ways analysts assess value and save the best approach for last.

Brown & Brown scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Brown & Brown Excess Returns Analysis

The Excess Returns valuation model estimates a company's value by considering how efficiently it generates returns over and above its cost of equity. Instead of looking solely at future cash flows, this approach evaluates whether Brown & Brown's return on invested capital creates genuine value for shareholders.

For Brown & Brown, the model uses a Book Value of $36.75 per share and a Stable EPS of $3.14 per share, which is a weighted estimate from four analysts. The company’s Cost of Equity stands at $1.41 per share, resulting in an Excess Return of $1.73 per share. Over the past several years, Brown & Brown has averaged a robust Return on Equity of 15.51%. The valuation also incorporates a Stable Book Value of $20.27 per share, based on the median from the last five years.

Based on these inputs, the Excess Returns model calculates an intrinsic value of $67.21 per share. Relative to the current market price, this implies the stock is about 16.9% overvalued using this specific approach. While Brown & Brown demonstrates consistent profitability and capital efficiency, the current price appears to be running ahead of the model's estimate of fair value.

Result: OVERVALUED

Our Excess Returns analysis suggests Brown & Brown may be overvalued by 16.9%. Discover 876 undervalued stocks or create your own screener to find better value opportunities.BRO Discounted Cash Flow as at Nov 2025

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Brown & Brown.

Story Continues

Approach 2: Brown & Brown Price vs Earnings

For established, profitable companies like Brown & Brown, the price-to-earnings ratio (PE) is a widely used measure of valuation. It shows how much investors are willing to pay today for each dollar of current earnings. This makes it a straightforward way to assess whether a stock appears expensive or cheap relative to profits.

The “right” or “fair” PE ratio depends not just on the company’s past performance, but also on its expected growth, profitability, and risk compared to its peers. Fast-growing, lower-risk, or more profitable companies generally command higher PEs. In contrast, mature or riskier stocks tend to trade at lower PEs. Therefore, it is important to look beyond the headline number.

At present, Brown & Brown is trading at a PE of 27.1x. For context, the insurance industry averages a PE of 13.2x, and the stock’s peer group sits at an even higher 47.1x. Simply Wall St’s proprietary Fair PE Ratio for Brown & Brown is 17.8x. Unlike basic comparisons, the Fair Ratio blends together company-specific growth potential, profitability, risk profile, size, and industry factors, providing a more tailored valuation benchmark than broad industry or peer averages alone.

Comparing these figures, Brown & Brown’s current PE of 27.1x stands notably above its Fair Ratio of 17.8x, suggesting the stock is overvalued using this approach.

Result: OVERVALUEDNYSE:BRO PE Ratio as at Nov 2025

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1404 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Brown & Brown Narrative

Earlier we mentioned there is an even better way to understand valuation. Let’s introduce you to Narratives. A Narrative is simply your story or perspective on a company like Brown & Brown, combining your unique assumptions for fair value, future revenues, earnings, and margins to build a picture of where you believe the business is headed. Narratives link this company story to your own financial forecast and resulting fair value, helping you see whether the current price offers an attractive opportunity or poses a risk.

Simply Wall St's platform makes using Narratives easy and accessible on the Community page, where millions of investors collaborate by sharing their perspectives in real time. Narratives update dynamically as new information, like regulatory news or earnings, comes out, so you always have an up-to-date picture of value versus price.

For example, based on recent analyst estimates, one Narrative sees Brown & Brown fairly valued at $130 per share with robust revenue growth and higher future profit margins. A more cautious Narrative supports just an $87 target, reflecting slower growth and margin risk. No single forecast is “correct.” Narratives empower you to sense-check consensus numbers against your own expectations so you make better buy or sell decisions that suit your outlook.

Do you think there's more to the story for Brown & Brown? Head over to our Community to see what others are saying!NYSE:BRO Community Fair Values as at Nov 2025

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include BRO.

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