Why Arch Capital (ACGL) Shares Are Attracting Investors Now
Arch Capital Group Ltd.’s ACGL new business opportunities, rate increases, solid growth within professional liability, improved invested assets and a solid capital position make it worth adding to one’s portfolio.
Growth Projections
The Zacks Consensus Estimate for ACGL’s 2023 earnings is pegged at $7.70 per share, suggesting a year-over-year increase of 58.1% on 32.6% higher revenues of $13.46 billion. The consensus estimate for 2024 earnings is pegged at $7.78 per share, indicating a year-over-year increase of 1.1% on 15.6% higher revenues of $15.57 billion.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 earnings has moved 3.1% and 0.9% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Earnings Surprise History
Arch Capital surpassed earnings estimates in each of the last four quarters, the average being 35.16%.
Zacks Rank & Price Performance
ACGL currently carries a Zacks Rank #2 (Buy). In the past year, the stock has surged 32.1% compared with the industry’s growth of 10.3%.
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Style Score
Arch Capital has a VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best opportunities in the value investing space.
Return on Equity
Arch Capital's return on equity of 23% improved 980 basis points year over year and was better than the industry average of 7.1%. Annualized operating return on average common equity expanded 1,110 basis points to 22.7% in the first nine months of 2023. This highlights the company’s efficiency in utilizing shareholders’ funds.
Business Tailwinds
ACGL’s premium should continue to gain from new business opportunities, rate increases, growth in existing accounts and higher Australian single-premium mortgage insurance. With operations spread across geographies, a compelling product portfolio provides meaningful diversification and earnings stability to the insurer.
Arch Capital’s impressive inorganic growth encompasses international expansion, operation enhancements and business diversification at attractive risk-adjusted returns. The diversification of its Mortgage Insurance business via strategic acquisitions complements the strength of the specialty insurance and reinsurance businesses.
This leading specialty P&C and mortgage insurer has been witnessing substantial improvement in net investment income over the last few years. Going forward with new money rates in fixed income portfolio in the range of 5.25% to 5.5% and a growing base of invested assets, the company expects to deliver an increasing level of investment income to help boost the bottom line.
Arch Capital’s solid balance sheet, with high liquidity and low leverage, shields it from market volatility and supports growth initiatives.
ACGL has an impressive Value Score of A, reflecting an attractive valuation of the stock.
Arch Capital has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Kinsale Capital Group, Inc. KNSL, Axis Capital Holdings Limited AXS and Cincinnati Financial Corporation CINF, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 14.25%. In the past year, KNSL has gained 16.4%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings has moved 0.8% and 1.3% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Axis Capital has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 22.45%. In the past year, AXS has lost 3.4%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $8.56 and $9.53, indicating a year-over-year increase of 47.3% and 11.3%, respectively.
Cincinnati Financial has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 38.33%. In the past year, CINF has lost 4.2%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share is pegged at $5.59 and $6.06, indicating a year-over-year increase of 31.8% and 8.3%, respectively.
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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report
Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
