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Why You Should Stay Invested in Arch Capital (ACGL) Stock
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Arch Capital Group Ltd.’s (ACGL - Free Report) new business opportunities, rate improvement, growth in existing accounts, favorable estimates and a solid capital position make it worth retaining in one’s portfolio.
Growth Projections
The Zacks Consensus Estimate for Arch Capital’s 2024 earnings per share indicates an increase of 1.18% from the year-ago reported number. The consensus estimate for revenues is pegged at $16 billion, implying a year-over-year improvement of 18.5%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 6.4% and 13.7%, respectively, from the corresponding 2024 estimates.
Earnings have grown 32.3% in the past five years, better than the industry average of 10.5%.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 1.42% and 1.56% north, respectively, in the past 60 days, reflecting analysts’ optimism.
Earnings Surprise History
Arch Capital surpassed earnings estimates in each of the last four quarters, the average being 28.41%.
Zacks Rank & Price Performance
ACGL currently carries a Zacks Rank #3 (Hold). In the past year, the stock has jumped 29.1% compared with the industry’s growth of 19.1%.
Image Source: Zacks Investment Research
Style Score
Arch Capital has a VGM Score of A. The VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Return on equity
Arch Capital's annualized return on equity of 24.6% expanded 230 basis points year over year, better than the industry average of 7.8%. This shows the company’s relative efficiency in managing shareholders’ funds.
Business Tailwinds
Arch Capital continues to gain from business opportunities, rate increases, a rise in existing accounts and growth in Australian single-premium mortgage insurance. Widespread operations coupled with a compelling product portfolio provide meaningful diversification and earnings stability to ACGL.
Arch Capital has an impressive inorganic growth story. The insurer, through acquisitions, continues to make international expansion, enhance operations and diversify business 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. Agreeing to buy Allianz’s U.S. MidCorp and Entertainment insurance business testifies ACGL's commitment to expanding its footprint in the middle-market property and casualty segment.
Investment income should benefit from a growing base of invested assets, driven by improving cash flows.
Arch Capital has been strengthening its balance sheet with high liquidity and low leverage. This also shields it from market volatility and supports growth initiatives.
Notably, its free cash flow conversion has remained more than 85% over the last many quarters, reflecting its solid earnings.
The long-term earnings growth is expected to be 6.8%. ACGL has a Growth Score of B. This style score helps analyze the growth prospects of a company.
Headwinds
However, being a P&C insurer, Arch Capital remains exposed to catastrophe loss, which renders substantial volatility to the insurer’s underwriting results. Exposure to cat events remains a concern, given its unpredictable nature and magnitude of losses that induce underwriting volatility.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Palomar Holdings, Inc. (PLMR - Free Report) , ProAssurance Corporation (PRA - Free Report) and NMI Holdings Inc. (NMIH - Free Report) . While Palomar Holdings and ProAssurance sport a Zacks Rank #1 (Strong Buy) each, NMI Holdings carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Palomar Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 15.10%. Over the past year, shares of PLMR have jumped 42.8%. The Zacks Consensus Estimate for PLMR’s 2024 and 2025 revenues implies year-over-year growth of 26% and 18.1%, respectively.
The Zacks Consensus Estimate for ProAssurance’s 2024 and 2025 earnings has moved 46.1% and 24.5% north, respectively, in the past 60 days. Over the past year, shares of PRA have jumped 29%. The Zacks Consensus Estimate for PRA’s 2024 and 2025 revenues implies year-over-year growth of 371.43% and 72.63%, respectively.
NMI Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 8.60%. Over the past year, shares of NMIH have jumped 33.6%. The Zacks Consensus Estimate for NMIH’s 2024 and 2025 revenues implies year-over-year growth of 10.6% and 7.6%, respectively.
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Why You Should Stay Invested in Arch Capital (ACGL) Stock
Arch Capital Group Ltd.’s (ACGL - Free Report) new business opportunities, rate improvement, growth in existing accounts, favorable estimates and a solid capital position make it worth retaining in one’s portfolio.
Growth Projections
The Zacks Consensus Estimate for Arch Capital’s 2024 earnings per share indicates an increase of 1.18% from the year-ago reported number. The consensus estimate for revenues is pegged at $16 billion, implying a year-over-year improvement of 18.5%.
The consensus estimate for 2025 earnings per share and revenues indicates an increase of 6.4% and 13.7%, respectively, from the corresponding 2024 estimates.
Earnings have grown 32.3% in the past five years, better than the industry average of 10.5%.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 1.42% and 1.56% north, respectively, in the past 60 days, reflecting analysts’ optimism.
Earnings Surprise History
Arch Capital surpassed earnings estimates in each of the last four quarters, the average being 28.41%.
Zacks Rank & Price Performance
ACGL currently carries a Zacks Rank #3 (Hold). In the past year, the stock has jumped 29.1% compared with the industry’s growth of 19.1%.
Image Source: Zacks Investment Research
Style Score
Arch Capital has a VGM Score of A. The VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Return on equity
Arch Capital's annualized return on equity of 24.6% expanded 230 basis points year over year, better than the industry average of 7.8%. This shows the company’s relative efficiency in managing shareholders’ funds.
Business Tailwinds
Arch Capital continues to gain from business opportunities, rate increases, a rise in existing accounts and growth in Australian single-premium mortgage insurance. Widespread operations coupled with a compelling product portfolio provide meaningful diversification and earnings stability to ACGL.
Arch Capital has an impressive inorganic growth story. The insurer, through acquisitions, continues to make international expansion, enhance operations and diversify business 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. Agreeing to buy Allianz’s U.S. MidCorp and Entertainment insurance business testifies ACGL's commitment to expanding its footprint in the middle-market property and casualty segment.
Investment income should benefit from a growing base of invested assets, driven by improving cash flows.
Arch Capital has been strengthening its balance sheet with high liquidity and low leverage. This also shields it from market volatility and supports growth initiatives.
Notably, its free cash flow conversion has remained more than 85% over the last many quarters, reflecting its solid earnings.
The long-term earnings growth is expected to be 6.8%. ACGL has a Growth Score of B. This style score helps analyze the growth prospects of a company.
Headwinds
However, being a P&C insurer, Arch Capital remains exposed to catastrophe loss, which renders substantial volatility to the insurer’s underwriting results. Exposure to cat events remains a concern, given its unpredictable nature and magnitude of losses that induce underwriting volatility.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Palomar Holdings, Inc. (PLMR - Free Report) , ProAssurance Corporation (PRA - Free Report) and NMI Holdings Inc. (NMIH - Free Report) . While Palomar Holdings and ProAssurance sport a Zacks Rank #1 (Strong Buy) each, NMI Holdings carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Palomar Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 15.10%. Over the past year, shares of PLMR have jumped 42.8%. The Zacks Consensus Estimate for PLMR’s 2024 and 2025 revenues implies year-over-year growth of 26% and 18.1%, respectively.
The Zacks Consensus Estimate for ProAssurance’s 2024 and 2025 earnings has moved 46.1% and 24.5% north, respectively, in the past 60 days. Over the past year, shares of PRA have jumped 29%. The Zacks Consensus Estimate for PRA’s 2024 and 2025 revenues implies year-over-year growth of 371.43% and 72.63%, respectively.
NMI Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 8.60%. Over the past year, shares of NMIH have jumped 33.6%. The Zacks Consensus Estimate for NMIH’s 2024 and 2025 revenues implies year-over-year growth of 10.6% and 7.6%, respectively.