BROWN & BROWN, INC. (BRO) stock intrinsic value fair value estimate & owner earnings analysis

Identity verified: the 10-K SEC header and cover page for CIK 0000079282 confirm Brown & Brown, Inc., NYSE ticker BRO, SIC 6411 Insurance Agents/Brokers/Services, FL-incorporated — no CIK mismapping. Screen: not Chinese-controlled, not cannabis, not crypto, not a shell, no going-concern language in the FY2025 10-K — all flags clear. Method note: BRO is a fee/commission-based insurance broker that does not underwrite risk or hold a large investment portfolio against policy reserves, so the standard asset-light Owner Earnings = CFO − Capex − SBC formula was used (not the insurer-underwriter convention used for risk-bearing carriers like WRB/CINF/CNA). Ten years of XBRL data (FY2016-FY2025; deduped by tag/period keeping the most-recently-filed accession, discarding two clear unit-scale tagging errors in the FY2021 10-K's FY2019-2021 diluted-share comparatives in favor of surrounding filings) show owner earnings per diluted share compounding from $1.37 (2016) to $4.12 (2025), a ~13%/yr trailing CAGR, driven by disciplined serial bolt-on M&A, steady organic growth and a capital-light model. FY2025 is a structural discontinuity: BRO closed the $9.6B acquisition of RSC/Accession Risk Management Group (Risk Strategies, One80) on 8/1/25, its largest deal ever, funded by $8.3B cash + $613M stock via a June 2025 follow-on equity offering and senior notes issuance; long-term debt jumped from $3.8B to $7.6B and diluted shares rose from ~284M to a current run-rate of ~335M, while reported organic revenue growth decelerated sharply to 2.8% (from 10.4% in 2024, 17.8% in 2023) on soft CAT-property pricing and tough flood-revenue comps. Per the Q4'25 earnings call, management guides only 'modest' 2026 organic improvement, projects $30-40M of 2026 EBITDA synergies with full Accession integration not until end-2028, and names deleveraging a near-term capital priority. Given the leverage step-up (current net debt ≈$19.5/share vs. owner earnings of ~$3.85/share) and organic deceleration, scenarios use FY2025's $1,289M owner earnings (~$3.85/share on ~335M current diluted shares) as the base year rather than the pre-deal trend: Bear = 2% growth/11% discount/2% terminal (persistent soft market + integration drag) → $24.10/share; Base = 7% growth/9.25% discount/2.75% terminal (well below the historical ~13% CAGR for mean reversion and leverage/integration risk) → $64.30/share; Bull = 11% growth/8.25% discount/3% terminal (continued disciplined M&A plus full-run-rate Accession synergies) → $121.80/share; each net of current net debt/share. The margin-of-safety price is set at a ~28% discount to base ($46.00) — wider than a typical stable-compounder discount given unusually elevated post-Accession leverage and this year's organic slowdown, narrower than a distressed/cyclical discount given BRO's long, successful bolt-on-integration track record and capital-light brokerage economics. Current price $72.92 (Yahoo Finance, 8/27/26) sits between base and bull, implying the market prices in more Accession-synergy/deleveraging optimism than this conservative base case. Data caveat: raw XBRL CFO/cash figures show several restatements across filings (notably FY2020-2021 CFO and FY2020 cash); most-recently-filed values were used throughout per method.