Back to top

Image: Bigstock

Are Investors Undervaluing Arch Capital Group (ACGL) Right Now?

Read MoreHide Full Article

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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on is Arch Capital Group (ACGL - Free Report) . ACGL is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 8.70 right now. For comparison, its industry sports an average P/E of 23.73. Over the past 52 weeks, ACGL's Forward P/E has been as high as 16.71 and as low as 7.92, with a median of 10.07.

Investors should also note that ACGL holds a PEG ratio of 0.87. 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 currently sports an average PEG of 2.03. 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 1.01.

Finally, we should also recognize that ACGL has a P/CF ratio of 9.89. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. ACGL's current P/CF looks attractive when compared to its industry's average P/CF of 24.11. Over the past 52 weeks, ACGL's P/CF has been as high as 10.32 and as low as 7.08, with a median of 8.32.

Everest Re Group (RE - Free Report) may be another strong Insurance - Property and Casualty stock to add to your shortlist. RE is a # 2 (Buy) stock with a Value grade of A.

Shares of Everest Re Group currently holds a Forward P/E ratio of 6.75, and its PEG ratio is 0.62. In comparison, its industry sports average P/E and PEG ratios of 23.73 and 2.03.

RE's price-to-earnings ratio has been as high as 9.82 and as low as 6.22, with a median of 8.21, while its PEG ratio has been as high as 0.88 and as low as 0.17, with a median of 0.77, all within the past year.

Additionally, Everest Re Group has a P/B ratio of 1.19 while its industry's price-to-book ratio sits at 1.30. For RE, this valuation metric has been as high as 1.58, as low as 1, with a median of 1.16 over the past year.

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


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Everest Re Group, Ltd. (RE) - free report >>

Arch Capital Group Ltd. (ACGL) - free report >>

Published in