Brown & Brown was added to the elite IBD Leaderboard model portfolio Wednesday. But the stock took an unexpected turn Monday.
Brown & Brown stock started forming a flat base after it pulled back from record highs in early September.
But on Monday the stock sank around 3.7% in heavier-than-average volume, along with other insurance names. The group pulled back on news that Hurricane Milton was upgraded to Category 5 and may hit Florida on Wednesday. Category 5 hurricanes produce sustained winds of 157 miles per hour or higher, according to the U.S. Weather Service.
This comes just after Hurricane Helene made landfall on Sept. 26 and left massive destruction across the Southeast.
Insurance stocks have been a top-performing industry group and had been rallying since July. The insurance broker group moved up to No. 26 from No. 35 four weeks ago and No. 64 three months ago. Brown & Brown is ranked fourth out of 16 stocks in the group. The company boasts that it is the sixth-largest independent insurance brokerage in the U.S.
Brown & Brown's personal insurance lines include home, auto, recreational vehicle and flood coverage. It partners with three flood insurance providers in Florida.
Brown & Brown Stock Tests Moving Average
The stock has formed its fourth base. Shares have gained around 52% since June 2023, when they broke out of a saucer-with-handle base with a 66.92 buy point. Brown & Brown stock jumped more than 5% in heavy volume after the company topped second-quarter earnings and sales estimates on July 22.
Despite Monday's tumble, shares are still in a flat base with a 106.02 buy point,
BRO stock undercut its 21-day exponential moving average and its 50-day line in Monday's drop. That could be reason to take some profits if you have a solid gain.
In fact, Monday's drop prompted Leaderboard to trim its position in Brown & Brown stock.
Insurance Broker Continues Earnings Growth Trend
Brown & Brown's quarterly earnings have increased 16% to 55% over the last seven quarters. And sales growth has averaged around 14% over the last four quarters.
Analysts' forecasts show third-quarter profit growth accelerating to 24% then 31% in Q4, before slipping to 7% and 8% in the following two quarters. Sales are expected to rise an average of 8% over the next four quarters.
The insurance broker will report its third-quarter earnings results on Oct. 28.
Full-year profit estimates were recently raised to a 23% climb in 2024 and to 8% in 2025. But Brown & Brown has a history of steady earnings, as shown in its 4 out of 99 possible Earnings Stability factor (lower numbers are better for this ranking).
Brown & Brown stock holds a B Accumulation/Distribution Rating, showing moderate institutional buying over the last 13 weeks. In addition, management owns 16% of shares, which indicates conviction in the insurance stock by its own leadership team.
As far as IBD ratings go, it holds almost perfect 98s for both Composite and Earnings Per Share, according to IBD Stock Checkup.
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