Arch Capital Group (NasdaqGS:ACGL) - Share price, News & Analysis

Q: What is the Fair Price of ACGL when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

ACGL ($45.98) is trading below our estimate of [[fair value]] ($114.13)

ACGL fundamental analysis
Snowflake Score
Valuation	6/6
Future Growth	4/6
Past Performance	2/6
Financial Health	5/6
Dividends	0/6

ACGL Stock Overview

Arch Capital Group Ltd., together with its subsidiaries, provides insurance, reinsurance, and mortgage insurance products worldwide.

Rewards

Trading at 59.7% below our estimate of its fair value

Earnings are forecast to grow 25.43% per year

Risk Analysis

No risks detected for ACGL from our risk checks.

Arch Capital Group Competitors

W. R. Berkley

NYSE:WRB

US$17.3b

Cincinnati Financial

NasdaqGS:CINF

US$16.4b

Loews

NYSE:L

US$13.9b

CNA Financial

NYSE:CNA

US$11.2b

Price History & Performance

Summary of all time highs, changes and price drops for Arch Capital Group
Historical stock prices
Current Share Price	US$45.98
52 Week High	US$50.73
52 Week Low	US$37.44
Beta	0.75
1 Month Change	4.07%
3 Month Change	-0.087%
1 Year Change	10.37%
3 Year Change	18.17%
5 Year Change	43.12%
Change since IPO	1,847.39%

Recent News & Updates

Jun 14

Does Arch Capital Group (NASDAQ:ACGL) Deserve A Spot On Your Watchlist?

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks...

Shareholder Returns

	ACGL	US Insurance	US Market
7D	5.6%	5.7%	1.3%
1Y	10.4%	3.0%	-11.7%

Return vs Industry: ACGL exceeded the US Insurance industry which returned 1.4% over the past year.

Return vs Market: ACGL exceeded the US Market which returned -11.6% over the past year.

Price Volatility

Is ACGL's price volatile compared to industry and market?
ACGL volatility
ACGL Average Weekly Movement	3.4%
Insurance Industry Average Movement	5.0%
Market Average Movement	7.8%
10% most volatile stocks in US Market	16.9%
10% least volatile stocks in US Market	3.2%

Stable Share Price: ACGL is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: ACGL's weekly volatility (3%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1995	5,200	Marc Grandisson	https://www.archgroup.com

Arch Capital Group Ltd., together with its subsidiaries, provides insurance, reinsurance, and mortgage insurance products worldwide. The company’s Insurance segment offers primary and excess casualty coverages; loss sensitive primary casualty insurance programs; collateral protection, debt cancellation, and service contract reimbursement products; directors’ and officers’ liability, errors and omissions liability, employment practices and fiduciary liability, crime, professional indemnity, and other financial related coverages; medical professional and general liability insurance coverages; and workers’ compensation and umbrella liability, as well as commercial automobile and inland marine products. It also provides property, energy, marine, and aviation insurance; travel insurance; accident, disability, and medical plan insurance coverages; captive insurance programs; employer’s liability; and contract and commercial surety coverages.

Arch Capital Group Fundamentals Summary

How do Arch Capital Group's earnings and revenue compare to its market cap?
ACGL fundamental statistics
Market Cap	US$16.88b
Earnings (TTM)	US$1.58b
Revenue (TTM)	US$8.57b

10.7x

P/E Ratio

2.0x

P/S Ratio

Is ACGL overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
ACGL income statement (TTM)
Revenue	US$8.57b
Cost of Revenue	US$5.78b
Gross Profit	US$2.79b
Other Expenses	US$1.21b
Earnings	US$1.58b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	4.31
Gross Margin	32.56%
Net Profit Margin	18.45%
Debt/Equity Ratio	21.9%

How did ACGL perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is ACGL undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

6/6

Valuation Score 6/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for ACGL?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for ACGL. This is calculated by dividing ACGL's market cap by their current preferred multiple.
What is ACGL's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$16.88b

ACGL key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.3x
Enterprise Value/EBITDA	12x
PEG Ratio	0.4x

Price to Earnings Ratio vs Peers

How does ACGL's PE Ratio compare to its peers?

ACGL PE Ratio vs Peers

The above table shows the PE ratio for ACGL vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	16.7x
WRB W. R. Berkley	13.1x	0.1%	US$17.3b
CINF Cincinnati Financial	30.2x	96.3%	US$16.4b
L Loews	12.8x	n/a	US$13.9b
CNA CNA Financial	10.8x	13.5%	US$11.2b
ACGL Arch Capital Group	10.7x	25.4%	US$16.9b

Price-To-Earnings vs Peers: ACGL is good value based on its Price-To-Earnings Ratio (10.7x) compared to the peer average (16.7x).

Price to Earnings Ratio vs Industry

How does ACGL's PE Ratio compare vs other companies in the US Insurance Industry?

Price-To-Earnings vs Industry: ACGL is good value based on its Price-To-Earnings Ratio (10.7x) compared to the US Insurance industry average (13.7x)

Price to Earnings Ratio vs Fair Ratio

What is ACGL's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

ACGL PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	10.7x
Fair PE Ratio	15.6x

Price-To-Earnings vs Fair Ratio: ACGL is good value based on its Price-To-Earnings Ratio (10.7x) compared to the estimated Fair Price-To-Earnings Ratio (15.6x).

Share Price vs Fair Value

What is the Fair Price of ACGL when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: ACGL ($45.98) is trading below our estimate of fair value ($114.13)

Significantly Below Fair Value: ACGL is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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Future Growth

How is Arch Capital Group forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

25.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: ACGL's forecast earnings growth (25.4% per year) is above the savings rate (1.9%).

Earnings vs Market: ACGL's earnings (25.4% per year) are forecast to grow faster than the US market (14.5% per year).

High Growth Earnings: ACGL's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: ACGL's revenue (10.2% per year) is forecast to grow faster than the US market (8% per year).

High Growth Revenue: ACGL's revenue (10.2% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: ACGL's Return on Equity is forecast to be low in 3 years time (15%).

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Past Performance

How has Arch Capital Group performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

25.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: ACGL has high quality earnings.

Growing Profit Margin: ACGL's current net profit margins (18.5%) are lower than last year (21.3%).

Past Earnings Growth Analysis

Earnings Trend: ACGL's earnings have grown significantly by 25.8% per year over the past 5 years.

Accelerating Growth: ACGL's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: ACGL had negative earnings growth (-22.2%) over the past year, making it difficult to compare to the Insurance industry average (-22.2%).

Return on Equity

High ROE: ACGL's Return on Equity (13.3%) is considered low.

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Financial Health

How is Arch Capital Group's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: ACGL's short term assets ($17.3B) exceed its short term liabilities ($8.9B).

Long Term Liabilities: ACGL's short term assets ($17.3B) do not cover its long term liabilities ($24.4B).

Debt to Equity History and Analysis

Debt Level: ACGL has more cash than its total debt.

Reducing Debt: ACGL's debt to equity ratio has reduced from 30.5% to 21.9% over the past 5 years.

Debt Coverage: ACGL's debt is well covered by operating cash flow (120%).

Interest Coverage: ACGL's interest payments on its debt are well covered by EBIT (11.7x coverage).

Balance Sheet

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Dividend

What is Arch Capital Group current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate ACGL's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate ACGL's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if ACGL's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if ACGL's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as ACGL has not reported any payouts.

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Management

How experienced are the management team and are they aligned to shareholders interests?

3.8yrs

Average management tenure

CEO

Marc Grandisson (54 yo)

4.42yrs

Tenure

US$9,336,013

Compensation

Mr. Marc Grandisson serves as a Director of Arch Capital Group Ltd since March 2018. Mr. Grandisson has been Chief Executive Officer since March 3, 2018 and served as President of Arch Capital Group Ltd si...

CEO Compensation Analysis

Compensation vs Market: Marc's total compensation ($USD9.34M) is about average for companies of similar size in the US market ($USD12.88M).

Compensation vs Earnings: Marc's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: ACGL's management team is considered experienced (3.8 years average tenure).

Board Members

Experienced Board: ACGL's board of directors are considered experienced (8.1 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/11 00:00
End of Day Share Price	2022/08/11 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31