Arch Capital Hits 52-Week High on Strong Q1 Performance - Analyst Blog
On May 14, 2015, shares of Arch Capital Group Ltd. ACGL hit a 52-week high of $63.53, driven by solid first-quarter results. With about 0.1 million shares exchanged hands in the last trading session, the stock finally closed at $63.45, gaining 1.5%. Year to date, the stock has returned 7.36%, much above 6.65% by the Nasdaq.
Arch Capital delivered operating earnings of $1.17 per share in the first quarter that outperformed the Zacks Consensus Estimate by 5.4% and improved 25% year over year. The outperformance came on the back of solid underwriting and investment results.
Solid underwriting results were driven by a benign catastrophe environment and favorable loss reserve development. Increase in net investment income was attributed to a higher level of income on certain fund investments.
A solid capital position has cushioned capital deployment via share repurchases which in turn lowers share count and increases shareholders’ return. In the first quarter, the company spent $162.9 million and has $724.2 million remaining under its authorization. Arch Capital has returned $3.40 billion via buyback since the inception of the repurchase program.
While return on equity improved 490 basis points to 18.9% in the quarter, book value per share increased 15% to $47.80 at Mar 2015 end.
With respect to its performance, this Zacks Rank #2 (Buy) property and casualty insurer delivered positive earnings surprises in last four quarters, with an average beat of 10.36%.
A sturdy first-quarter performance drove the Zacks Consensus Estimate as most of the estimates moved north in the last 30 days. It increased 4.3% to $4.13 (as 7 of 8 estimates were revised higher) for 2015 and 2.5% to $4.16 (as 4 of 9 estimates were revised higher) for 2016. The expected long-term growth rate for the stock is 6.2%.
Other Stocks to Consider
Investors interested in the property and casualty insurer can take a look at Markel Corp. MKL, White Mountains Insurance Group, Ltd. WTM and State Auto Financial Corp. STFC. All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
MARKEL CORP (MKL): Free Stock Analysis Report
STATE AUTO FINL (STFC): Free Stock Analysis Report
ARCH CAP GP LTD (ACGL): Free Stock Analysis Report
WHITE MTN INS (WTM): Free Stock Analysis Report
To read this article on Zacks.com click here.
