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Arch Capital Up 39% Year to Date: What's Aiding the Stock?

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Arch Capital Group Ltd.’s (ACGL - Free Report) shares have surged 38.8% year to date, outperforming the industry's rise of 7.1% and the Zacks S&P 500 composite’s increase of 16%. With market capitalization of $14.9 billion, average volume of shares traded in the last three months was 1.2 million. In fact, shares of the company hit a new 52-week high of $37.24 in the last trading session.
 


 

What’s Behind the Upside?

Arch Capital’s return on equity is 10.2%, better than the industry average of 7.1%. This reflects the company’s prudent usage of its shareholders’ funds.

Arch Capital delivered positive earnings surprise in the last six quarters, reflecting operational excellence.

A diversified product and service portfolio helps this insurer generate sustained premium growth. A strong inorganic portfolio helps it expand internationally, add capabilities, enhance operations and diversify business.

The company remains focused on expansion of U.S. Mortgage Insurance business. Arch Capital broadened its customer base to include national and regional banks and mortgage originators alongside maintaining and increasing its share of the mortgage insurance credit union market. The expansion of the mortgage insurance business also complements its strength in the specialty insurance and reinsurance businesses, which continue to be crucial to its global operations.

Arch Capital has a strong capital position, which shields it from market volatility and enables it to pursue new opportunities in keeping with its long-term strategy. The company has $161 million remaining under its share repurchase authorization.

Arch Capital has a favorable VGM Score of B. This style score analyzes the growth prospects of a company.  This style score helps identify stocks with the most attractive value, best growth, and most promising momentum. Back-tested results show that VGM Score of A or B combined with Zacks Rank #1 (Strong Buy) and #2 (Buy) offers best investment opportunity.

Arch Capital sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for 2019 and 2020 has been revised up by 1.5% and 1.8% in the past seven days, respectively. The long-term expected earnings growth rate is 10%.

Other Stocks to Consider

Some other top-ranked property and casualty insurance stocks are Alleghany Corp. , Argo Group International Holdings, Ltd. and RLI Corp. (RLI - Free Report) . Each of these stocks sports a Zacks Rank#1.

Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. The company delivered positive surprise of 32.51% in the last reported quarter.

Argo Group underwrites specialty insurance and reinsurance products in the property and casualty markets. The company delivered positive surprise of 34.09% in the last reported quarter.

RLI underwrites property and casualty insurance in the United States and internationally. The company delivered positive surprise of 20.34% in the last reported quarter.

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