Results: Arch Capital Group Ltd. Beat Earnings Expectations And Analysts Now Have New Forecasts

Arch Capital Group Ltd. (NASDAQ:ACGL) just released its latest first-quarter results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 6.5% to hit US$4.1b. Arch Capital Group also reported a statutory profit of US$2.92, which was an impressive 37% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Arch Capital Group

Following the latest results, Arch Capital Group's nine analysts are now forecasting revenues of US$15.9b in 2024. This would be a decent 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dive 26% to US$9.48 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$15.3b and earnings per share (EPS) of US$8.31 in 2024. So it seems there's been a definite increase in optimism about Arch Capital Group's future following the latest results, with a nice gain to the earnings per share forecasts in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of US$107, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Arch Capital Group, with the most bullish analyst valuing it at US$116 and the most bearish at US$94.00 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Arch Capital Group is an easy business to forecast or the the analysts are all using similar assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Arch Capital Group'shistorical trends, as the 14% annualised revenue growth to the end of 2024 is roughly in line with the 16% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 5.9% annually. So although Arch Capital Group is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Arch Capital Group's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$107, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Arch Capital Group going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Arch Capital Group (1 shouldn't be ignored!) that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.