Insurance brokerage firm Arthur J. Gallagher (NYSE: AJG) met Wall Street’s revenue expectations in Q2 CY2026, with sales up 24.5% year on year to $4.00 billion. Its non-GAAP profit of $2.84 per share was 0.9% above analysts’ consensus estimates.

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"We delivered an excellent second quarter!" said J. Patrick Gallagher, Jr., Chairman and CEO.

Company Overview

Founded in 1927 and operating in approximately 130 countries through direct operations and correspondent networks, Arthur J. Gallagher (NYSE: AJG) provides insurance brokerage, reinsurance, consulting, and third-party claims settlement services to businesses and individuals worldwide.

Revenue Growth

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $15.73 billion in revenue over the past 12 months, Arthur J. Gallagher is a behemoth in the business services sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices.

As you can see below, Arthur J. Gallagher’s 16.3% annualized revenue growth over the last five years was incredible. This is a great starting point for our analysis because it shows Arthur J. Gallagher’s demand was higher than many business services companies.

We at StockStory place the most emphasis on long-term growth, but within business services, a half-decade historical view may miss recent innovations or disruptive industry trends. Arthur J. Gallagher’s annualized revenue growth of 20% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated.

We can dig further into the company’s revenue dynamics by analyzing its most important segment, Insurance Brokerage. Over the last two years, Arthur J. Gallagher’s Insurance Brokerage revenue (commissions and fees) averaged 24.7% year-on-year growth. This segment has outperformed its total sales during the same period, lifting the company’s performance.

This quarter, Arthur J. Gallagher’s year-on-year revenue growth of 24.5% was excellent, and its $4.00 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 11.2% over the next 12 months, a deceleration versus the last two years. We still think its growth trajectory is attractive given its scale and suggests the market sees success for its products and services.

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Operating Margin

Arthur J. Gallagher’s operating margin has generally stayed the same over the last 12 months, averaging 14.5% over the last five years. This profitability was top-notch for a business services business, showing it’s a well-run company with an efficient cost structure.

Analyzing the trend in its profitability, Arthur J. Gallagher’s operating margin might have fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Arthur J. Gallagher’s EPS grew at 18.5% compounded annual growth rate over the last five years, higher than its 16.3% annualized revenue growth. However, we take this with a grain of salt because its operating margin didn’t improve and it didn’t repurchase its shares, meaning the delta came from reduced interest expenses or taxes.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

Although it performed well, Arthur J. Gallagher’s two-year annual EPS growth of 11.8% lower than its 20% two-year revenue growth.

Diving into Arthur J. Gallagher’s quality of earnings can give us a better understanding of its performance. A two-year view shows Arthur J. Gallagher has diluted its shareholders, growing its share count by 16.1%. This has led to lower per share earnings. Taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q2, Arthur J. Gallagher reported adjusted EPS of $2.84, up from $2.33 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Arthur J. Gallagher’s full-year EPS to grow 17.4% from $12.01 to $14.10.

Key Takeaways from Arthur J. Gallagher’s Q2 Results

Revenue, EBITDA, and EPS were roughly in line with expectations. Overall, this was a quarter without many surprises, good or bad. The stock is flattish after reporting.

Is Arthur J. Gallagher an attractive investment opportunity at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).