Brown & Brown falls after third-quarter results miss estimates

What happened

Brown & Brown (BRO) fell 2.6% on October 26, 2026, because the company’s third-quarter adjusted EPS missed the Zacks consensus. The stock closed at $71.08 after the report, with trading volume 2.3 times its 20-day average. The S&P 500 rose 0.7% on the day, leaving the stock 2.7 percentage points worse than the Financial Services sector median, which rose 0.1%.

How big was the move

The decline was 1.3 times a typical daily move for this stock, a modestly larger-than-normal reaction to the earnings release. Over the prior five sessions the stock had risen 2.7%, so the one-day drop reversed part of a recent short-run gain. The session’s elevated trading volume signaled heavier-than-normal investor activity around the report.

The technical picture

The stock traded 8.3% above its 20-day moving average and 5.7% above its 50-day moving average, with the 50-day average above the 200-day average, a sign of an established uptrend. It was 6.3% above its 200-day moving average and had been above the 200-day average for 8 consecutive trading days. The Relative Strength Index (14 days) stood at 62, in a neutral range between 30 and 70. Over one month the stock rose 16.9%, while three-month performance fell 3.5% and one-year performance fell 19.9%, leaving it 20.4% below the 52-week high and 33.9 percentage points behind the S&P 500 for the year.

Fundamentals and valuation

For the four quarters through September 30, 2026, Brown & Brown reported revenue of $6.97 billion, which grew 30.8% from a year earlier. Gross margin widened to 58.8% from 49.4% a year earlier, reflecting higher revenue per dollar of sales. Operating margin narrowed to 21.9% from 27.2% a year earlier, suggesting that costs and integration effects tempered profit conversion. Free-cash-flow margin stood at 14.3% and return on invested capital was 6.8% for the period. The balance sheet showed net cash of $407.0 million.

On valuation metrics the stock traded at 15.8 times expected earnings and implied a free-cash-flow yield of 4.1%. Those figures place the company in a midrange valuation: price to forward earnings is not extreme, but the free-cash-flow yield is modest relative to higher-yielding peers.

Earnings and analyst expectations

Brown & Brown reported on October 26, 2026, diluted net income per share of $0.67 and Diluted Net Income Per Share - Adjusted of $1.07; the reported quarterly EPS of $1.07 missed the Zacks Consensus Estimate of $1.08, 1.8% below estimates. That result compared with $1.05 a year ago for the comparable period. The company has recorded zero consecutive quarters beating estimates, and the average surprise over the last four reports was 0.6% above estimates. Historically, the typical two-day reaction after recent reports was that the stock rose 0.3%.

Analysts’ consensus rating on the stock was Hold, with 32% of covering analysts at Buy or Strong Buy. The consensus price target was $72.67, which is 2.2% above the closing price on October 26, 2026. Thirty-one analysts had a rating on the stock.

PromtFinance scores rank Brown & Brown as neutral to weak across a number of dimensions within the sector: Value 46 (Neutral), Growth 37 (Weak), Quality 57 (Neutral), Momentum 31 (Weak), Revisions 8 (Very weak), and Stability 43 (Weak). Those scores reflect the mix of solid top-line growth and softer profitability and revision trends.

What to watch

• Next scheduled earnings report: January 25, 2027.
• Consensus price target: $72.67, 2.2% above the close on October 26, 2026.
• Revenue for the four quarters through September 30, 2026: $6.97 billion, grew 30.8% year over year.
• Operating margin: 21.9% for the four quarters through September 30, 2026, versus 27.2% a year earlier.
• Balance sheet: net cash of $407.0 million.