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Arthur J. Gallagher DCF Stock Analysis

Here’s my assumptions:

Risk Free Rate (10 Years Interest Rate Swap): 3.99%

Risk Premium (Taken from the Aswath Damodaran equity premium spreadsheet): 4.33%

Interest Rate Spread on The Risk free rate ( For the cost of debt calculation): 2.5%

Historical Data

Revenue growth in the last 10 years (CAGR): 8.37%

Earnings growth in the last 10 years (CAGR): 16.97%

Unlevered Free Cash Flow growth in the last 10 years (CAGR): 16.32%

Future Assumptions

End of Year FCF growth: 8%

Growth until end of 2026: 16%

Growth until end of 2034: 8%

Perpetual growth: 3%

Net Debt: -0.927B

Outstanding Stock Options Present Value Assumption: $1.137B

Restricted Stock Units + Performance Stock Units Present Value Assumption: $0.798B

Stock Valuation based on these assumptions: $265

Last update 09/28/2025

All the content in this newsletter should be taken as informational content only. THIS IS NOT FINANCIAL ADVICE! Do your own Due Diligence before investing or contact a professional financial advisor.

I don’t have a position in Arthur J. Gallagher (AJG) and I don’t plan to add a position in the coming days.