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Arch Capital Group (ACGL) Gains But Lags Market: What You Should Know

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In the latest trading session, Arch Capital Group (ACGL - Free Report) closed at $46.33, marking a +1.73% move from the previous day. The stock lagged the S&P 500's daily gain of 2.59%. Meanwhile, the Dow gained 2.66%, and the Nasdaq, a tech-heavy index, added 0.07%.

Coming into today, shares of the property and casualty insurer had gained 0.09% in the past month. In that same time, the Finance sector lost 9.14%, while the S&P 500 lost 9.22%.

Wall Street will be looking for positivity from Arch Capital Group as it approaches its next earnings report date. On that day, Arch Capital Group is projected to report earnings of $1.09 per share, which would represent year-over-year growth of 47.3%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.51 billion, up 24.61% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.64 per share and revenue of $9.6 billion. These totals would mark changes of +29.61% and +13.21%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for Arch Capital Group. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Arch Capital Group is holding a Zacks Rank of #2 (Buy) right now.

In terms of valuation, Arch Capital Group is currently trading at a Forward P/E ratio of 9.81. This valuation marks a discount compared to its industry's average Forward P/E of 14.73.

We can also see that ACGL currently has a PEG ratio of 0.98. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Insurance - Property and Casualty stocks are, on average, holding a PEG ratio of 1.53 based on yesterday's closing prices.

The Insurance - Property and Casualty industry is part of the Finance sector. This group has a Zacks Industry Rank of 144, putting it in the bottom 43% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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