ARCH CAPITAL GROUP LTD (ACGL)

BMG0450A1053 - Common Stock

90.99  +2 (+2.25%)

After market: 99.7254 +8.74 (+9.6%)

Fundamental Rating

6

We assign a fundamental rating of 6 out of 10 to ACGL. ACGL was compared to 141 industry peers in the Insurance industry. While ACGL has a great profitability rating, there are some minor concerns on its financial health. ACGL scores decently on growth, while it is valued quite cheap. This could make an interesting combination.



8

1. Profitability

1.1 Basic Checks

In the past year ACGL was profitable.
In the past year ACGL had a positive cash flow from operations.
Each year in the past 5 years ACGL has been profitable.
Each year in the past 5 years ACGL had a positive operating cash flow.

1.2 Ratios

ACGL's Return On Assets of 7.70% is amongst the best of the industry. ACGL outperforms 91.43% of its industry peers.
The Return On Equity of ACGL (25.46%) is better than 86.43% of its industry peers.
Looking at the Return On Invested Capital, with a value of 4.61%, ACGL is in the better half of the industry, outperforming 77.86% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for ACGL is in line with the industry average of 4.38%.
The last Return On Invested Capital (4.61%) for ACGL is above the 3 year average (3.48%), which is a sign of increasing profitability.
Industry RankSector Rank
ROA 7.7%
ROE 25.46%
ROIC 4.61%
ROA(3y)5.04%
ROA(5y)4.49%
ROE(3y)16.86%
ROE(5y)14.97%
ROIC(3y)3.48%
ROIC(5y)3.47%

1.3 Margins

ACGL has a Profit Margin of 35.09%. This is amongst the best in the industry. ACGL outperforms 95.00% of its industry peers.
ACGL's Profit Margin has improved in the last couple of years.
The Operating Margin of ACGL (26.27%) is better than 87.14% of its industry peers.
In the last couple of years the Operating Margin of ACGL has grown nicely.
Industry RankSector Rank
OM 26.27%
PM (TTM) 35.09%
GM N/A
OM growth 3Y6.85%
OM growth 5Y8.62%
PM growth 3Y26.86%
PM growth 5Y20.34%
GM growth 3YN/A
GM growth 5YN/A

4

2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), ACGL is destroying value.
The number of shares outstanding for ACGL has been increased compared to 1 year ago.
ACGL has less shares outstanding than it did 5 years ago.
ACGL has a better debt/assets ratio than last year.

2.2 Solvency

The Debt to FCF ratio of ACGL is 0.41, which is an excellent value as it means it would take ACGL, only 0.41 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.41, ACGL belongs to the top of the industry, outperforming 86.43% of the companies in the same industry.
A Debt/Equity ratio of 0.12 indicates that ACGL is not too dependend on debt financing.
ACGL's Debt to Equity ratio of 0.12 is fine compared to the rest of the industry. ACGL outperforms 77.86% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.12
Debt/FCF 0.41
Altman-Z N/A
ROIC/WACC0.52
WACC8.8%

2.3 Liquidity

Industry RankSector Rank
Current Ratio N/A
Quick Ratio N/A

6

3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 17.28% over the past year.
The Earnings Per Share has been growing by 30.84% on average over the past years. This is a very strong growth
Looking at the last year, ACGL shows a very strong growth in Revenue. The Revenue has grown by 30.27%.
ACGL shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 19.58% yearly.
EPS 1Y (TTM)17.28%
EPS 3Y84.29%
EPS 5Y30.84%
EPS Q2Q%-13.85%
Revenue 1Y (TTM)30.27%
Revenue growth 3Y16.5%
Revenue growth 5Y19.58%
Sales Q2Q%20.63%

3.2 Future

ACGL is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 5.38% yearly.
Based on estimates for the next years, ACGL will show a quite strong growth in Revenue. The Revenue will grow by 13.21% on average per year.
EPS Next Y7.33%
EPS Next 2Y4.25%
EPS Next 3Y5.38%
EPS Next 5YN/A
Revenue Next Year21.57%
Revenue Next 2Y16.78%
Revenue Next 3Y13.21%
Revenue Next 5YN/A

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.

7

4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 9.58, the valuation of ACGL can be described as very reasonable.
Based on the Price/Earnings ratio, ACGL is valued a bit cheaper than the industry average as 65.71% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 27.73. ACGL is valued rather cheaply when compared to this.
With a Price/Forward Earnings ratio of 9.91, the valuation of ACGL can be described as very reasonable.
ACGL's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. ACGL is cheaper than 62.14% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 22.83. ACGL is valued rather cheaply when compared to this.
Industry RankSector Rank
PE 9.58
Fwd PE 9.91

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, ACGL is valued a bit cheaper than 68.57% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of ACGL indicates a somewhat cheap valuation: ACGL is cheaper than 71.43% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 5.1
EV/EBITDA 8.16

4.3 Compensation for Growth

The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
ACGL has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.31
PEG (5Y)0.31
EPS Next 2Y4.25%
EPS Next 3Y5.38%

6

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 5.50%, ACGL is a good candidate for dividend investing.
ACGL's Dividend Yield is rather good when compared to the industry average which is at 4.33. ACGL pays more dividend than 88.57% of the companies in the same industry.
ACGL's Dividend Yield is rather good when compared to the S&P500 average which is at 2.34.
Industry RankSector Rank
Dividend Yield 5.5%

5.2 History

The dividend of ACGL has a limited annual growth rate of 0.55%.
ACGL is new to the dividend game and has less than 3 years of track record.
Dividend Growth(5Y)0.55%
Div Incr Years0
Div Non Decr Years0

5.3 Sustainability

0.71% of the earnings are spent on dividend by ACGL. This is a low number and sustainable payout ratio.
The dividend of ACGL is growing, but earnings are growing more, so the dividend growth is sustainable.
DP0.71%
EPS Next 2Y4.25%
EPS Next 3Y5.38%

ARCH CAPITAL GROUP LTD

NASDAQ:ACGL (12/20/2024, 8:00:00 PM)

After market: 99.7254 +8.74 (+9.6%)

90.99

+2 (+2.25%)

Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)10-30 2024-10-30/amc
Earnings (Next)02-12 2025-02-12/amc
Inst Owners89.4%
Inst Owner Change0.73%
Ins Owners3.04%
Ins Owner Change5.1%
Market Cap34.23B
Analysts80.87
Price Target123.49 (35.72%)
Short Float %1.38%
Short Ratio2.5
Dividend
Industry RankSector Rank
Dividend Yield 5.5%
Dividend Growth(5Y)0.55%
DP0.71%
Div Incr Years0
Div Non Decr Years0
Ex-Date11-18 2024-11-18 (5)
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)6.87%
Min EPS beat(2)-0.36%
Max EPS beat(2)14.1%
EPS beat(4)3
Avg EPS beat(4)12.16%
Min EPS beat(4)-0.36%
Max EPS beat(4)20.43%
EPS beat(8)7
Avg EPS beat(8)22.8%
EPS beat(12)11
Avg EPS beat(12)24.34%
EPS beat(16)15
Avg EPS beat(16)30.27%
Revenue beat(2)1
Avg Revenue beat(2)-2.21%
Min Revenue beat(2)-6.09%
Max Revenue beat(2)1.66%
Revenue beat(4)3
Avg Revenue beat(4)0.1%
Min Revenue beat(4)-6.09%
Max Revenue beat(4)4.53%
Revenue beat(8)7
Avg Revenue beat(8)4.19%
Revenue beat(12)8
Avg Revenue beat(12)0.41%
Revenue beat(16)10
Avg Revenue beat(16)3.93%
PT rev (1m)-1.07%
PT rev (3m)6.53%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-13.05%
EPS NY rev (1m)-0.36%
EPS NY rev (3m)-1.32%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)7.52%
Revenue NY rev (1m)0.8%
Revenue NY rev (3m)-0.68%
Valuation
Industry RankSector Rank
PE 9.58
Fwd PE 9.91
P/S 2.12
P/FCF 5.1
P/OCF 5.06
P/B 1.54
P/tB 1.65
EV/EBITDA 8.16
EPS(TTM)9.5
EY10.44%
EPS(NY)9.18
Fwd EY10.09%
FCF(TTM)17.84
FCFY19.61%
OCF(TTM)17.98
OCFY19.76%
SpS42.95
BVpS59.2
TBVpS55.25
PEG (NY)1.31
PEG (5Y)0.31
Profitability
Industry RankSector Rank
ROA 7.7%
ROE 25.46%
ROCE 5.84%
ROIC 4.61%
ROICexc 4.68%
ROICexgc 6.31%
OM 26.27%
PM (TTM) 35.09%
GM N/A
FCFM 41.53%
ROA(3y)5.04%
ROA(5y)4.49%
ROE(3y)16.86%
ROE(5y)14.97%
ROIC(3y)3.48%
ROIC(5y)3.47%
ROICexc(3y)3.54%
ROICexc(5y)3.54%
ROICexgc(3y)4.69%
ROICexgc(5y)4.63%
ROCE(3y)4.4%
ROCE(5y)4.4%
ROICexcg growth 3Y14.3%
ROICexcg growth 5Y16.7%
ROICexc growth 3Y12.07%
ROICexc growth 5Y15.11%
OM growth 3Y6.85%
OM growth 5Y8.62%
PM growth 3Y26.86%
PM growth 5Y20.34%
GM growth 3YN/A
GM growth 5YN/A
F-Score8
Asset Turnover0.22
Health
Industry RankSector Rank
Debt/Equity 0.12
Debt/FCF 0.41
Debt/EBITDA 0.62
Cap/Depr 33.13%
Cap/Sales 0.33%
Interest Coverage 33.43
Cash Conversion 153.54%
Profit Quality 118.36%
Current Ratio N/A
Quick Ratio N/A
Altman-Z N/A
F-Score8
WACC8.8%
ROIC/WACC0.52
Cap/Depr(3y)51.1%
Cap/Depr(5y)51.43%
Cap/Sales(3y)0.46%
Cap/Sales(5y)0.48%
Profit Quality(3y)184.4%
Profit Quality(5y)177.6%
High Growth Momentum
Growth
EPS 1Y (TTM)17.28%
EPS 3Y84.29%
EPS 5Y30.84%
EPS Q2Q%-13.85%
EPS Next Y7.33%
EPS Next 2Y4.25%
EPS Next 3Y5.38%
EPS Next 5YN/A
Revenue 1Y (TTM)30.27%
Revenue growth 3Y16.5%
Revenue growth 5Y19.58%
Sales Q2Q%20.63%
Revenue Next Year21.57%
Revenue Next 2Y16.78%
Revenue Next 3Y13.21%
Revenue Next 5YN/A
EBIT growth 1Y42.88%
EBIT growth 3Y24.49%
EBIT growth 5Y29.89%
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y87.05%
FCF growth 3Y26.02%
FCF growth 5Y30.08%
OCF growth 1Y86.17%
OCF growth 3Y25.82%
OCF growth 5Y29.82%