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Are Investors Undervaluing Arch Capital Group (ACGL) Right Now?

·3 min read

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Arch Capital Group (ACGL) is a stock many investors are watching right now. ACGL is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 9.33 right now. For comparison, its industry sports an average P/E of 27.78. Over the past year, ACGL's Forward P/E has been as high as 16.71 and as low as 8.72, with a median of 10.14.

Investors will also notice that ACGL has a PEG ratio of 0.93. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ACGL's PEG compares to its industry's average PEG of 2.36. Over the past 52 weeks, ACGL's PEG has been as high as 1.67 and as low as 0.87, with a median of 1.01.

Finally, investors will want to recognize that ACGL has a P/CF ratio of 10.15. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. ACGL's current P/CF looks attractive when compared to its industry's average P/CF of 26.31. Over the past year, ACGL's P/CF has been as high as 10.15 and as low as 7.08, with a median of 8.11.

If you're looking for another solid Insurance - Property and Casualty value stock, take a look at Chubb Limited (CB). CB is a # 2 (Buy) stock with a Value score of A.

Chubb Limited is trading at a forward earnings multiple of 11.98 at the moment, with a PEG ratio of 1.20. This compares to its industry's average P/E of 27.78 and average PEG ratio of 2.36.

CB's price-to-earnings ratio has been as high as 16.31 and as low as 11.25, with a median of 13.68, while its PEG ratio has been as high as 1.63 and as low as 1.13, with a median of 1.37, all within the past year.

Chubb Limited also has a P/B ratio of 1.60 compared to its industry's price-to-book ratio of 1.40. Over the past year, its P/B ratio has been as high as 1.62, as low as 1.26, with a median of 1.44.

These are only a few of the key metrics included in Arch Capital Group and Chubb Limited strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, ACGL and CB look like an impressive value stock at the moment.


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