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Reasons Why Investors Should Retain Arch Capital (ACGL)
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Arch Capital Group Ltd.’s (ACGL - Free Report) business opportunities, rate increases, growth in existing accounts and solid capital position make it worth retaining in one’s portfolio.
Growth Projections
The consensus estimate for Arch Capital’s 2025 earnings per share indicates a year-over-year increase of 8.2% from the consensus estimate of 2024. The consensus estimate for 2025 revenues is pinned at $16.95 billion, implying a year-over-year improvement of 9.1% from the consensus mark of 2024.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 0.2% and 0.4% north, respectively, in the past seven days, reflecting analysts’ optimism.
Earnings Surprise History
Arch Capital surpassed earnings estimates in each of the last four quarters, the average being 27.32%.
Zacks Rank & Price Performance
ACGL currently carries a Zacks Rank #3 (Hold). In the past year, the stock has jumped 29.5% compared with the industry’s growth of 26.9%.
Image Source: Zacks Investment Research
Style Score
Arch Capital has a VGM Score of B. The VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Return on equity
Arch Capital's return on equity in the trailing 12 months was 21.9%, better than the industry average of 7.3%. This highlights the company’s efficiency in utilizing shareholders’ funds.
Business Tailwinds
Business opportunities, rate increases, a rise in existing accounts and growth in Australian single-premium mortgage insurance should benefit Arch Capital’s premiums. Widespread operations coupled with a compelling product portfolio provide meaningful diversification and earnings stability to ACGL. We estimate 2026 earnings to witness a three-year CAGR of 1.1%.
The leading specialty P&C and mortgage insurer’s inorganic growth rides on expanding internationally, enhancing operations and diversifying the business 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.
In April 2024, Arch Capital’s subsidiary, Arch Insurance North America, agreed to acquire Allianz’s U.S. MidCorp and Entertainment insurance businesses. The addition of Allianz's Entertainment business complements ACGL's existing suite of specialty products, further diversifying its portfolio and market reach. This acquisition not only expands the insurer's talent pool but also reinforces its commitment to maintaining a client-focused culture.
A growing base of invested assets coupled with new money rates of 4.5-5% in the fixed-income portfolio should benefit investment income.
Arch Capital’s solid balance sheet, with high liquidity and low leverage, shields it from market volatility and supports growth initiatives. Notably, its free cash flow conversion has remained more than 85% over the last many quarters, reflecting its solid earnings.
HCI Group has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 522.51%. In the past year, shares of HCI have surged 117.8%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies year-over-year growth of 37.9% and 11.6%, respectively, from the consensus estimate of the corresponding years.
Palomar Holdings has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 11.12%. In the past year, shares of PLMR have soared 40.3%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings implies year-over-year growth of 16.2% and 18%, respectively, from the consensus estimate of the corresponding years.
Mercury General has a solid track record of beating earnings estimates in three of the trailing four quarters and missed in one, the average being 3,417.48%. In the past year, shares of MCY have rallied 60%.
The Zacks Consensus Estimate for MCY’s 2024 and 2025 earnings implies year-over-year growth of 866.67% and 34.48%, respectively, from the consensus estimate of the corresponding years.
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Reasons Why Investors Should Retain Arch Capital (ACGL)
Arch Capital Group Ltd.’s (ACGL - Free Report) business opportunities, rate increases, growth in existing accounts and solid capital position make it worth retaining in one’s portfolio.
Growth Projections
The consensus estimate for Arch Capital’s 2025 earnings per share indicates a year-over-year increase of 8.2% from the consensus estimate of 2024. The consensus estimate for 2025 revenues is pinned at $16.95 billion, implying a year-over-year improvement of 9.1% from the consensus mark of 2024.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 0.2% and 0.4% north, respectively, in the past seven days, reflecting analysts’ optimism.
Earnings Surprise History
Arch Capital surpassed earnings estimates in each of the last four quarters, the average being 27.32%.
Zacks Rank & Price Performance
ACGL currently carries a Zacks Rank #3 (Hold). In the past year, the stock has jumped 29.5% compared with the industry’s growth of 26.9%.
Image Source: Zacks Investment Research
Style Score
Arch Capital has a VGM Score of B. The VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Return on equity
Arch Capital's return on equity in the trailing 12 months was 21.9%, better than the industry average of 7.3%. This highlights the company’s efficiency in utilizing shareholders’ funds.
Business Tailwinds
Business opportunities, rate increases, a rise in existing accounts and growth in Australian single-premium mortgage insurance should benefit Arch Capital’s premiums. Widespread operations coupled with a compelling product portfolio provide meaningful diversification and earnings stability to ACGL. We estimate 2026 earnings to witness a three-year CAGR of 1.1%.
The leading specialty P&C and mortgage insurer’s inorganic growth rides on expanding internationally, enhancing operations and diversifying the business 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.
In April 2024, Arch Capital’s subsidiary, Arch Insurance North America, agreed to acquire Allianz’s U.S. MidCorp and Entertainment insurance businesses. The addition of Allianz's Entertainment business complements ACGL's existing suite of specialty products, further diversifying its portfolio and market reach. This acquisition not only expands the insurer's talent pool but also reinforces its commitment to maintaining a client-focused culture.
A growing base of invested assets coupled with new money rates of 4.5-5% in the fixed-income portfolio should benefit investment income.
Arch Capital’s solid balance sheet, with high liquidity and low leverage, shields it from market volatility and supports growth initiatives. Notably, its free cash flow conversion has remained more than 85% over the last many quarters, reflecting its solid earnings.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are HCI Group, Inc. (HCI - Free Report) , Palomar Holdings, Inc. (PLMR - Free Report) and Mercury General Corporation (MCY - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 522.51%. In the past year, shares of HCI have surged 117.8%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies year-over-year growth of 37.9% and 11.6%, respectively, from the consensus estimate of the corresponding years.
Palomar Holdings has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 11.12%. In the past year, shares of PLMR have soared 40.3%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings implies year-over-year growth of 16.2% and 18%, respectively, from the consensus estimate of the corresponding years.
Mercury General has a solid track record of beating earnings estimates in three of the trailing four quarters and missed in one, the average being 3,417.48%. In the past year, shares of MCY have rallied 60%.
The Zacks Consensus Estimate for MCY’s 2024 and 2025 earnings implies year-over-year growth of 866.67% and 34.48%, respectively, from the consensus estimate of the corresponding years.