Should Value Investors Buy Arch Capital Group (ACGL) Stock?

ACGL

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Arch Capital Group (ACGL - Free Report) is a stock many investors are watching right now. ACGL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 9.19. This compares to its industry's average Forward P/E of 24.82. ACGL's Forward P/E has been as high as 16.71 and as low as 7.92, with a median of 10.01, all within the past year.

Investors will also notice that ACGL has a PEG ratio of 0.92. 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 industry has an average PEG of 2.31 right now. Over the last 12 months, ACGL's PEG has been as high as 1.67 and as low as 0.79, with a median of 1.

Finally, investors should note that ACGL has a P/CF ratio of 10.52. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 25.14. Over the past 52 weeks, ACGL's P/CF has been as high as 10.52 and as low as 7.49, with a median of 8.64.

Value investors will likely look at more than just these metrics, but the above data helps show that Arch Capital Group is likely undervalued currently. And when considering the strength of its earnings outlook, ACGL sticks out at as one of the market's strongest value stocks.

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