BRO

Brown & Brown is one of the highest-quality compounders in insurance brokerage, having grown revenue every year since 1993 except 2009, from $95.6M to $5.90B at a 14.2% CAGR. FY2025 revenue jumped 22.8% to $5.90B and the multi-year history is relentlessly upward (FY2021 $3.05B to FY2025 $5.90B). The capital-light intermediary model throws off cash — operating cash flow of $1.45B against just $68.0M of capex — and the balance sheet shows a conservative liabilities/equity of 0.31x. This is a franchise, not a turnaround.

The complication is how the growth is being financed and what shareholders actually capture. Of the 22.5% commissions-and-fees growth in 2025, organic growth was only 2.8% — the rest came from acquisitions like Poulton Associates. To fund that M&A, long-term debt rose 91.6% to $6.89B, the current portion of debt jumped 219.6% to $719M, and shares outstanding grew 19.1% to 340M. The dilution shows up directly in the numbers: net income rose 6.1% to $1.05B, yet diluted EPS fell 8.7% to $3.16. A 95.3% jump in equity to $12.6B also pushed ROE down to a modest 8.4%.