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Arthur J. Gallagher & Co. (AJG) vs Eli Lilly and Company (LLY): Which Is the Better Buy in 2026?

As of 2026-11-01, AJG is overvalued at $276, with a DCF intrinsic value of $231 and a margin of safety of -20%. LLY is fairly valued at $1418, with an intrinsic value of $1710 and a margin of safety of 17%. Of the two, LLY has the wider margin of safety.

AJG
Arthur J. Gallagher & Co.
$276.07
VS
LLY
Eli Lilly and Company
$1417.54

Rewards

AJG
  • ★Free cash flow has grown at a 13.9% CAGR over the past 4 years, demonstrating strong earnings power growth.
  • ★Each dollar of retained earnings has created $4.62 of earning power — management is an exceptional capital allocator.
  • ★PEG ratio of 0.99 suggests the stock is undervalued relative to its growth rate — paying less than 1x for each unit of earnings growth.
LLY
  • ★Eli Lilly and Company has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
  • ★Gross margin of 83.6% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
  • ★Eli Lilly and Company scores 73/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.

Risks

AJG
  • ⚠Share count has increased by 21% over the past 4 years, diluting existing shareholders.
  • ⚠Altman Z-Score of 1.31 places the company in the distress zone — financial patterns resemble those of companies that experienced bankruptcy.
  • ⚠Insiders have sold $7.6M worth of stock in the past 3 months — significant insider liquidation.
LLY
  • ⚠FCF yield of 0.7% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
  • ⚠Insiders have sold $10.0M worth of stock in the past 3 months — significant insider liquidation.

Key Valuation Metrics

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AJG
LLY
Valuation
N/A
Free Cash Flow
$9.34B
N/A
FCF Yield
0.74%
42.15
Trailing P/E
46.01
18.68
Forward P/E
28.66
Quality & Moat
6.85%
ROIC
40.83%
7.21%
ROE
86.02%
43.96%
Gross Margin
83.63%
0.99
PEG Ratio
1.36
Balance Sheet Safety
0.51
Net Debt / Equity
1.11
N/A
Interest Coverage
N/A
2.64
Net Debt / EBITDA
0.96
1.01%
Dividend Yield
0.49%
AJG: 5Ties: 1LLY: 4
AJGLLY

Historical Fundamentals

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AJG

Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

LLY

Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.

$1 Retained Earnings Test

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AJG
$11.75
created per $1 retained over 3 years
Exceptional Value Creator
Σ Retained
$2.26B
Δ Market Cap
+$26.56B
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
LLY
$27.49
created per $1 retained over 3 years
Exceptional Value Creator
Σ Retained
$22.34B
Δ Market Cap
+$614.01B
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer

Discounted Cash Flow (DCF) Analysis

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AJG
19.6% Overvalued
Price is 19.6% above estimated fair value
Current Price: $276.07
Fair Value: $230.80
Strongly undervalued
Undervalued
Fairly valued
Overvalued
Strongly overvalued
LLY
17.1% Margin of Safety
Price is 17.1% below estimated fair value
Current Price: $1417.54
Fair Value: $1709.89
Strongly undervalued
Undervalued
Fairly valued
Overvalued
Strongly overvalued

Reverse DCF — Market-Implied Growth

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AJG

Requires positive FCF to compute implied growth rate.

LLY

What growth rate is the market pricing in at $1418?

+23.5%
Market-Implied Owner Earnings Growth
Standard FCF implies +34.7%

The market implies +23.5% Owner Earnings growth, below historical trends — potential opportunity.

Standard FCF implies a more demanding +34.7%, reflecting heavy growth investment expected to generate future returns.

Economic Moat Score

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AJG
62/100
Narrow Moat
70+ Wide · 40-69 Narrow · <40 None

Narrow moat with revenue predictability as the key competitive advantage. Improving roic consistency would strengthen the moat.

Composite score measuring competitive advantage durability across four dimensions: returns above cost of capital, pricing power stability, revenue predictability, and capital efficiency. Based on 4 years of fundamental data.
LLY
73/100
Wide Moat
70+ Wide · 40-69 Narrow · <40 None

Wide moat driven primarily by roic consistency. Reinvestment Efficiency is the area most vulnerable to competitive pressure.

Composite score measuring competitive advantage durability across four dimensions: returns above cost of capital, pricing power stability, revenue predictability, and capital efficiency. Based on 5 years of fundamental data.

Forensic Accounting

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AJG
-1.94
Possible Manipulator
Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

M-Score Trend

Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
LLY
-1.83
Possible Manipulator
Above -1.78 = likely manipulator · -2.22 to -1.78 = grey zone

M-Score Trend

Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.

Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.

Ownership Breakdown

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AJG
Insiders 0.9%Institutions 95.7%Retail & Other 3.5%
No. of Institutional Holders1,734
High insider ownership aligns management incentives with shareholders — a key signal in Buffett-style analysis. Institutional concentration can indicate smart-money conviction but also crowding risk.
LLY
Insiders 0.2%Institutions 85.5%Retail & Other 14.4%
No. of Institutional Holders5,906
High insider ownership aligns management incentives with shareholders — a key signal in Buffett-style analysis. Institutional concentration can indicate smart-money conviction but also crowding risk.

High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.

Insider Buying Activity

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AJG
0
Buys (3M)
1
Buys (12M)
Total value (12M): $988,488
PESCH MICHAEL ROBERT
Officer
$988,488
@ $247.12 · 2025-11-03
PESCH MICHAEL ROBERT
President
$18,784
@ $318.37 · 2025-06-18
Open market purchases · includes direct & indirect ownership · excludes option exercises
LLY
0
Buys (3M)
0
Buys (12M)
MONTARCE LUCAS E
Chief Financial Officer
$494,627
@ $691.79 · 2025-08-15
ALVAREZ RALPH
Director
$500,473
@ $660.25 · 2025-08-13
VAN NAARDEN JACOB S.
Officer
$647,360
@ $647.36 · 2025-08-13
SULZBERGER GABRIELLE
Director
$75,018
@ $641.18 · 2025-08-12
Open market purchases · includes direct & indirect ownership · excludes option exercises

Open market purchases · includes direct & indirect ownership · excludes option exercises.

Insider Selling Activity

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AJG
4
Sells (3M)
13
Sells (12M)
Total value (12M): $24.52M
CARY RICHARD C
Officer
$252,858
@ $252.86 · 2026-09-15
HUDSON SCOTT R
Officer
$3.17M
@ $264.13 · 2026-09-02
BAY WALTER D
General Counsel
$3.24M
@ $270.08 · 2026-08-24
MEAD CHRISTOPHER E.
Officer
$899,588
@ $257.03 · 2026-08-19
CARY RICHARD C
Officer
$618,000
@ $206.00 · 2026-06-02
HUDSON SCOTT R
Officer
$864,766
@ $227.57 · 2026-03-06
MEAD CHRISTOPHER E.
Officer
$908,472
@ $227.12 · 2026-03-05
GALLAGHER J PATRICK JR
Chief Executive Officer
$6.32M
@ $230.31 · 2026-03-02
MEAD CHRISTOPHER E.
Officer
$1.03M
@ $258.11 · 2025-12-23
HOWELL DOUGLAS K
Chief Financial Officer
$1.29M
@ $258.05 · 2025-12-22
BAY WALTER D
General Counsel
$4.04M
@ $255.00 · 2025-12-19
MEAD CHRISTOPHER E.
Officer
$313,425
@ $250.74 · 2025-11-21
CARY RICHARD C
Officer
$1.57M
@ $261.00 · 2025-11-18
HOWELL DOUGLAS K
Chief Financial Officer
$4.19M
@ $299.42 · 2025-09-22
HOWELL DOUGLAS K
Chief Financial Officer
$899,334
@ $299.78 · 2025-09-09
HUDSON SCOTT R
Officer
$3.83M
@ $297.60 · 2025-09-08
CARY RICHARD C
Officer
$1.22M
@ $306.00 · 2025-08-21
HUDSON SCOTT R
Officer
$3.54M
@ $337.17 · 2025-05-21
PIETRUCHA SUSAN E
Officer
$4.65M
@ $344.13 · 2025-05-19
JOHNSON DAVID S
Director
$342,038
@ $342.04 · 2025-05-16
CARY RICHARD C
Officer
$4.07M
@ $339.51 · 2025-05-07
HUDSON SCOTT R
Officer
$2.51M
@ $333.59 · 2025-03-21
Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives
LLY
2
Sells (3M)
27
Sells (12M)
Total value (12M): $2.40B
JONSSON PATRIK
Officer
$7.64M
@ $1175.10 · 2026-08-17
ZAKROWSKI DONALD A
Officer
$2.37M
@ $1185.01 · 2026-08-10
YUFFA ILYA
Officer
$2.88M
@ $1150.77 · 2026-06-10
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$15.75M
@ $995.36 · 2026-05-06
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$322.38M
@ $1103.48 · 2026-01-07
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$1.51M
@ $1085.01 · 2026-01-05
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$3.90M
@ $1085.04 · 2025-12-29
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$2.85M
@ $1085.17 · 2025-12-24
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$260,409
@ $1085.04 · 2025-12-23
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$161.08M
@ $1095.35 · 2025-11-25
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$17.34M
@ $1109.30 · 2025-11-25
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$152.06M
@ $1068.52 · 2025-11-24
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$111.50M
@ $1058.66 · 2025-11-21
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$39.07M
@ $1051.66 · 2025-11-20
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$176.10M
@ $1051.17 · 2025-11-19
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$62.31M
@ $1034.78 · 2025-11-18
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$10.19M
@ $1030.68 · 2025-11-17
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$183.80M
@ $1030.87 · 2025-11-14
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$48.02M
@ $1030.26 · 2025-11-13
ZAKROWSKI DONALD A
Officer
$1.01M
@ $1010.50 · 2025-11-13
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$308.41M
@ $1011.18 · 2025-11-12
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$279.35M
@ $986.64 · 2025-11-11
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$16.41M
@ $972.52 · 2025-11-10
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$38.47M
@ $951.56 · 2025-11-05
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$167.09M
@ $933.26 · 2025-11-05
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$479,038
@ $910.72 · 2025-11-04
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$266.65M
@ $888.83 · 2025-11-03
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$260.17M
@ $863.35 · 2025-10-31
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$3.16M
@ $863.24 · 2025-10-10
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$9.04M
@ $852.49 · 2025-10-09
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$86.23M
@ $850.27 · 2025-10-08
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$22.72M
@ $848.01 · 2025-10-07
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$137.04M
@ $850.22 · 2025-10-06
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$161.22M
@ $837.93 · 2025-10-03
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$92.50M
@ $821.55 · 2025-10-02
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$107.36M
@ $794.15 · 2025-10-01
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$177.29M
@ $821.47 · 2025-10-01
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$86.79M
@ $763.39 · 2025-09-30
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$18.06M
@ $763.09 · 2025-09-19
LILLY ENDOWMENT, INC.
Beneficial Owner of more than 10% of a Class of Security
$81.53M
@ $764.65 · 2025-09-18
ZAKROWSKI DONALD A
Officer
$734,930
@ $734.93 · 2025-08-28
Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives

Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.

🎭 Mr. Market's Mood

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AJG
FearGreed
😏Greed(72/100)

"Market is optimistic — be cautious and ensure you have a margin of safety"

Composite sentiment score based on 6 market signals. Inspired by Buffett's "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
LLY
FearGreed
😏Greed(73/100)

"Market is optimistic — be cautious and ensure you have a margin of safety"

Composite sentiment score based on 6 market signals. Inspired by Buffett's "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.

⚖️ Buffett Signal

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AJG
⚪Awaiting DCF Data

The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

DCF Margin of Safety: N/AMr. Market's Mood: Greed (72)
LLY
⚪Awaiting DCF Data

The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.

DCF Margin of Safety: N/AMr. Market's Mood: Greed (73)
View AJG Full AnalysisView LLY Full Analysis

Frequently Asked Questions: AJG vs LLY

Is Arthur J. Gallagher & Co. or Eli Lilly and Company more undervalued in 2026?▼

Based on our discounted cash flow model, LLY trades at a 17.1% margin of safety (intrinsic value $1710 vs. price $1418), compared to AJG's -19.6% margin of safety (intrinsic $231 vs. $276).

Which stock has a wider economic moat, Arthur J. Gallagher & Co. or Eli Lilly and Company?▼

LLY scores 73/100 (Wide moat), while AJG scores 62/100 (Narrow moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.

Is Arthur J. Gallagher & Co. in financial distress?▼

AJG's Altman Z-Score of 1.3 places it in the Distress zone, signaling elevated bankruptcy risk. LLY scores 8.7 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.

Which stock has higher return on invested capital, Arthur J. Gallagher & Co. or Eli Lilly and Company?▼

LLY earns 40.8% ROIC versus AJG's 6.8%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.

Which dividend is safer, Arthur J. Gallagher & Co.'s or Eli Lilly and Company's?▼

AJG's dividend earns a safety score of 88/100 (Very Safe), compared to LLY's 64/100 (Safe). AJG has raised its dividend for 1 consecutive years.

AJG vs LLY: Which Is the Better Buy in 2026? | SafetyMargin.io