Why You Should Stay Invested in Arch Capital (ACGL) Stock

Zacks Equity Research

14 July 2022 at 10:29 am·3-min read

Arch Capital Group Ltd. ACGL has been gaining momentum on the back of business opportunities, rate increases, growth in existing accounts and a solid capital position

Growth Projections

The Zacks Consensus Estimate for 2022 and 2023 earnings per share is pegged at $4.29 and $5.04, indicating year-over-year increases of 19.8% and 17.6%, respectively. The expected long-term earnings growth rate is pegged at 10%.

Earnings Surprise History

Arch Capital has a solid track record of beating earnings estimates in five of the last six quarters.

Zacks Rank & Price Performance

Arch Capital currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 16.4% against the industry’s decline of 6.6%.

Image Source: Zacks Investment Research

Return on Equity (ROE)

Arch Capital’s ROE for the trailing 12 months is 13.2%, up 820 basis points year over year and reflecting its efficiency in utilizing shareholders’ funds.

Style Score

Arch Capital has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.

Business Tailwinds

Premiums in the Insurance segment stand to gain from solid growth within professional liability and travel business units in both North America and internationally. New business opportunities as well as growth in existing accounts are expected to boost the Insurance segment.

Rate improvements should continue to expand writings in the property casualty segment. Rate increases remain well above the long-term loss cost trends and have spread to more lines.

Growth in the Reinsurance segment is primarily driven by casualty and other specialty lines. Rate increases, new business opportunities and growth in existing accounts should benefit the top line.

The mortgage segment stands to benefit from strong housing demand and excellent credit conditions as well as growth in Australian single premium mortgage insurance.

This leading specialty property and casualty and mortgage insurer actively pursues acquisitions to expand internationally, enhance capabilities, boost operations and diversify the business. The acquisitions are likely to boost its insurance solutions and strengthen its position as the only globally diversified insurer of mortgage credit risk.

The P&C insurer boasts an impressive solvency level. Cash flow from operations is likely to gain from higher premiums.

Stocks to Consider

Some better-ranked stocks from the insurance industry are United Fire Group, Inc. UFCS, Zurich Insurance Group Ltd. ZURVY and Fidelity National Financial, Inc. FNF. While United Fire sports a Zacks Rank #1 (Strong Buy), Zurich Insurance and Fidelity National carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 270.8%. In the past year, UFCS' stock has gained 37.2%.

The Zacks Consensus Estimate for UFCS’ 2022 earnings has moved 23.5% north in the past 60 days.

The Zacks Consensus Estimate for Zurich Insurance’s 2022 and 2023 earnings has moved 3% and 5.1% north, respectively, in the past 60 days. In the past year, the ZURVY stock has rallied 6.8%.

The Zacks Consensus Estimate for Zurich Insurance’s 2022 and 2023 earnings implies 7.5% and 9.6 year-over-year growth, respectively.

Fidelity National’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.6%. In the past year, FNF stock has lost 14.8%.

The Zacks Consensus Estimate for Fidelity National’s 2022 and 2023 earnings has moved 0.3% and 0.5% north, respectively, in the past 60 days.

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Fidelity National Financial, Inc. (FNF) : Free Stock Analysis Report

United Fire Group, Inc (UFCS) : Free Stock Analysis Report

Arch Capital Group Ltd. (ACGL) : Free Stock Analysis Report

Zurich Insurance Group Ltd. (ZURVY) : Free Stock Analysis Report

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