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Arch Capital (ACGL) Rallies 69% in a Year: More Room to Run?
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Arch Capital Group Ltd.’s (ACGL - Free Report) shares have moved up 68.9% in the past year, outperforming the industry’s growth of 23.6%. The Finance sector and the Zacks S&P 500 composite have risen 7.6% and 15.1%, respectively, in the same period. With a market capitalization of $28.7 billion, the average volume of shares traded in the last three months was 1.9 million.
Image Source: Zacks Investment Research
The rally was largely driven by favorable estimates, business opportunities, rate increases, growth in existing accounts and a solid capital position. This Zacks Rank #1 (Strong Buy) property and casualty insurer has a decent history of delivering earnings surprises in the last four quarters, the average being 26.83%.
Annualized operating return on average common equity expanded 600 basis points to 21.3% in the first half of 2023. This highlights the company’s efficiency in utilizing shareholders’ funds.
Can ACGL Retain the Momentum?
The Zacks Consensus Estimate for 2023 earnings is pegged at $6.73 per share, suggesting a year-over-year increase of 38.1% on 30.5% higher revenues of $13.25 billion. The consensus estimate for 2024 earnings is pegged at $7.43 per share, indicating a year-over-year increase of 10.4% on 14.9% higher revenues of $15.23 billion.
ACGL’s premium should continue to gain from new business opportunities, rate increases, growth in existing accounts and higher Australian single-premium mortgage insurance. With operations spread across geographies, a compelling product portfolio provides meaningful diversification and earnings stability to the insurer.
Arch Capital’s impressive inorganic growth encompasses international expansion, operation enhancements and business diversification at attractive risk-adjusted returns. The diversification of its Mortgage Insurance business via strategic acquisitions complements the strength of the specialty insurance and reinsurance businesses.
This leading specialty P&C and mortgage insurer has been witnessing substantial improvement in net investment income over the last few years. In the first half of 2023, net investment income more than doubled year over year.
Going forward with new money rates in fixed income portfolio in the range of 4.5% to 5% and a growing base of invested assets, the company expects to deliver an increasing level of investment income to help boost the bottom line.
Arch Capital’s solid balance sheet, with high liquidity and low leverage, shields it from market volatility and supports growth initiatives.
The Zacks Consensus Estimate for 2023 and 2024 has moved 2.3% and 2.5% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited (AXS - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) . While Axis Capital sports a Zacks Rank #1, Cincinnati Financial and Kinsale Capital carry Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 9.75%. In the past year, AXS has gained 4%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $8.41 and $9.31, indicating a year-over-year increase of 44.7% and 10.7%, respectively.
Cincinnati Financial has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 25.25%. In the past year, CINF has lost 0.8%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share is pegged at $5 and $5.88, indicating a year-over-year increase of 17.9% and 17.6%, respectively.
Kinsale Capital beat estimates in each of the last four quarters, the average being 14.88%. In the past year, KNSL has rallied 54.9%.
The Zacks Consensus Estimate for 2023 and 2024 has moved 0.2% and 0.07% north, respectively, in the past seven days, reflecting analysts’ optimism.
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Arch Capital (ACGL) Rallies 69% in a Year: More Room to Run?
Arch Capital Group Ltd.’s (ACGL - Free Report) shares have moved up 68.9% in the past year, outperforming the industry’s growth of 23.6%. The Finance sector and the Zacks S&P 500 composite have risen 7.6% and 15.1%, respectively, in the same period. With a market capitalization of $28.7 billion, the average volume of shares traded in the last three months was 1.9 million.
Image Source: Zacks Investment Research
The rally was largely driven by favorable estimates, business opportunities, rate increases, growth in existing accounts and a solid capital position. This Zacks Rank #1 (Strong Buy) property and casualty insurer has a decent history of delivering earnings surprises in the last four quarters, the average being 26.83%.
Annualized operating return on average common equity expanded 600 basis points to 21.3% in the first half of 2023. This highlights the company’s efficiency in utilizing shareholders’ funds.
Can ACGL Retain the Momentum?
The Zacks Consensus Estimate for 2023 earnings is pegged at $6.73 per share, suggesting a year-over-year increase of 38.1% on 30.5% higher revenues of $13.25 billion. The consensus estimate for 2024 earnings is pegged at $7.43 per share, indicating a year-over-year increase of 10.4% on 14.9% higher revenues of $15.23 billion.
ACGL’s premium should continue to gain from new business opportunities, rate increases, growth in existing accounts and higher Australian single-premium mortgage insurance. With operations spread across geographies, a compelling product portfolio provides meaningful diversification and earnings stability to the insurer.
Arch Capital’s impressive inorganic growth encompasses international expansion, operation enhancements and business diversification at attractive risk-adjusted returns. The diversification of its Mortgage Insurance business via strategic acquisitions complements the strength of the specialty insurance and reinsurance businesses.
This leading specialty P&C and mortgage insurer has been witnessing substantial improvement in net investment income over the last few years. In the first half of 2023, net investment income more than doubled year over year.
Going forward with new money rates in fixed income portfolio in the range of 4.5% to 5% and a growing base of invested assets, the company expects to deliver an increasing level of investment income to help boost the bottom line.
Arch Capital’s solid balance sheet, with high liquidity and low leverage, shields it from market volatility and supports growth initiatives.
The Zacks Consensus Estimate for 2023 and 2024 has moved 2.3% and 2.5% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Axis Capital Holdings Limited (AXS - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) . While Axis Capital sports a Zacks Rank #1, Cincinnati Financial and Kinsale Capital carry Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 9.75%. In the past year, AXS has gained 4%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $8.41 and $9.31, indicating a year-over-year increase of 44.7% and 10.7%, respectively.
Cincinnati Financial has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 25.25%. In the past year, CINF has lost 0.8%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share is pegged at $5 and $5.88, indicating a year-over-year increase of 17.9% and 17.6%, respectively.
Kinsale Capital beat estimates in each of the last four quarters, the average being 14.88%. In the past year, KNSL has rallied 54.9%.
The Zacks Consensus Estimate for 2023 and 2024 has moved 0.2% and 0.07% north, respectively, in the past seven days, reflecting analysts’ optimism.