What happened?
Shares of insurance brokerage firm Brown & Brown (NYSE: BRO) fell 4.9% in the afternoon session after the company reported slowing organic revenue growth and margin compression in its third-quarter 2026 financial results. According to the company’s press release and the earnings slides filed with it, Brown & Brown reported third-quarter revenue of $1.73 billion, up 7.4% from a year earlier.
Organic revenue growth was 1.2%, and organic growth including contingents was 1.5%. Adjusted EBITDAC margin was 34.6%, down from 36.6%. Diluted earnings were 67 cents. Adjusted diluted earnings were $1.07, up from $1.05.
On the earnings call, Chief Executive Powell Brown said excess-and-surplus property rates fell 15% to 35% in the quarter, and that he expects industry catastrophe property rates to fall another 10% to 20% in 2027, likely toward the high end of that range.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Brown & Brown? Access our full analysis report here, it’s free.
What is the market telling us
Brown & Brown’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 19 days ago when the stock gained 2.9% on the news that investors continued to bid on Oppenheimer’s initiated coverage on the company with an Outperform rating. According to Streetinsider, Phillips set a $73 price target, about 20% above the share price when the note was published. He said Brown & Brown’s issues are largely in the past and that the shares should outperform as organic growth turns. The Accession acquisition, he said, brings multi-year earnings and growth opportunities. Investing.com reported the shares were trading at about 11.3 times his 2028 earnings estimate, against a long-term average of 21.6 times, and that the $73 target equals 13.5 times that estimate.
Brown & Brown is down 13.4% since the beginning of the year, and at $67.25 per share, it is trading 23.4% below its 52-week high of $87.76 from October 2025. Despite the year-to-date decline, investors who bought $1,000 worth of Brown & Brown’s shares 5 years ago would now be looking at an investment worth $1,073.
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