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

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 8.80. This compares to its industry's average Forward P/E of 25.48. Over the last 12 months, ACGL's Forward P/E has been as high as 16.71 and as low as 8.72, with a median of 10.11.

ACGL is also sporting a PEG ratio of 0.88. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ACGL's industry currently sports an average PEG of 2.44. ACGL's PEG has been as high as 1.67 and as low as 0.87, with a median of 1.01, all within the past year.

Finally, we should also recognize that ACGL has a P/CF ratio of 9.87. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. ACGL's P/CF compares to its industry's average P/CF of 25.54. Within the past 12 months, ACGL's P/CF has been as high as 10.32 and as low as 7.08, with a median of 8.18.

These are only a few of the key metrics included in Arch Capital Group's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ACGL looks like an impressive value stock at the moment.


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