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Arch Capital Group (ACGL) Stock Sinks As Market Gains: Here's Why

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In the latest trading session, Arch Capital Group (ACGL - Free Report) closed at $89.61, marking a -1.42% move from the previous day. The stock trailed the S&P 500, which registered a daily gain of 0.27%. At the same time, the Dow added 0.43%, and the tech-heavy Nasdaq gained 0.37%.

The stock of property and casualty insurer has risen by 1.13% in the past month, lagging the Finance sector's gain of 2.38% and the S&P 500's gain of 1.85%.

The investment community will be paying close attention to the earnings performance of Arch Capital Group in its upcoming release. The company is expected to report EPS of $1.76, down 11.56% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $4.81 billion, up 9.79% from the prior-year quarter.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $8.12 per share and a revenue of $18.88 billion, indicating changes of -12.5% and +13.56%, respectively, from the former year.

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Arch Capital Group. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the business and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. 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, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.6% upward. At present, Arch Capital Group boasts a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that Arch Capital Group has a Forward P/E ratio of 11.19 right now. Its industry sports an average Forward P/E of 11.73, so one might conclude that Arch Capital Group is trading at a discount comparatively.

Meanwhile, ACGL's PEG ratio is currently 5.57. 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 2.43 based on yesterday's closing prices.

The Insurance - Property and Casualty industry is part of the Finance sector. This industry, currently bearing a Zacks Industry Rank of 37, finds itself in the top 15% echelons of all 250+ industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.


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