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Should You Retain Arch Capital (ACGL) Stock in Your Portfolio?

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Arch Capital Group Ltd. ACGL is well poised for growth on the back of solid segmental performance, acquisitions and solid capital position.

Growth Projections

The Zacks Consensus Estimate for 2022 and 2023 earnings per share is pegged at $4.32 and $5.15, indicating year-over-year increases of 20.6% and 19.3%, respectively. The expected long-term earnings growth rate is pegged at 10%.

Earnings Surprise History

Arch Capital has a solid earnings surprise history. It beat estimates in three of the last four quarters, the average being 30.68%.

Zacks Rank & Price Performance

Arch Capital currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 14.3% against the industry’s decline of 5.9%.

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Zacks Investment Research


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Return on Equity (ROE)

Arch Capital’s ROE for the trailing 12 months is 13.2%, expanded 820 basis points year over year, reflecting its efficiency in utilizing shareholders’ funds.

Style Score

Arch Capital has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.

Business Tailwinds

Solid performances across the Insurance and Reinsurance segments of Arch Capital are likely to drive revenues in the days ahead.

By virtue of growth across the lines of business, due in part to rate increases, new business opportunities as well as growth in existing accounts, the Insurance segment is expected to benefit.

Business opportunities, growth in existing accounts in casualty and property and strong rate increases are expected to drive the performance of the Reinsurance segment.

The Mortgage segment is well-poised for improvement on growth in Australia’s single-premium mortgage insurance due to the acquisition of Westpac Lenders Mortgage Insurance Limited in the third quarter of 2021, as well as higher U.S. primary mortgage insurance monthly and single premium volume.

Improving underwriting results in most of the lines, favorable prior year development and higher premium earned continue to improve the underlying combined ratio.

This leading specialty property, and casualty and mortgage insurer actively pursues acquisitions to expand internationally, enhance capabilities, boost operations and diversify the business. The acquisitions are likely to boost the insurer’s insurance solutions and strengthen its position as the only globally diversified insurer of mortgage credit risk.

The P&C insurer boasts an impressive solvency level. Cash flow from operations is likely to gain from higher premiums.

Stocks to Consider

Some better-ranked stocks from the property and casualty insurance industry are RLI Corp. RLI, W.R. Berkley Corporation WRB and HCI Group, Inc. HCI, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

RLI Corp.’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 45.89%. In the past year, RLI Corp. has increased 7%.

The Zacks Consensus Estimate for RLI’s 2022 earnings has moved 0.7% north in the past 30 days.

W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.08%. In the past year, W.R. Berkley's stock has increased 34.3%.

The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 6.3% and 6.2% north, respectively, in the past 60 days.

The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 60 days. In the past year, HCI Group stock has lost 35.9%.

The Zacks Consensus Estimate for HCI’s 2022 and 2023 earnings per share indicates year-over-year increases of 280.9% and 75%, respectively.


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