ARCH CAPITAL GROUP LTD (ACGL) Stock Fundamental Analysis
NASDAQ:ACGL - Nasdaq - BMG0450A1053 - Common Stock - Currency: USD
We assign a fundamental rating of 5 out of 10 to ACGL. ACGL was compared to 143 industry peers in the Insurance industry. ACGL has an excellent profitability rating, but there are some minor concerns on its financial health. ACGL has a correct valuation and a medium growth rate.
1. Profitability
1.1 Basic Checks
In the past year ACGL was profitable.
ACGL had a positive operating cash flow in the past year.
In the past 5 years ACGL has always been profitable.
ACGL had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
ACGL's Return On Assets of 4.96% is amongst the best of the industry. ACGL outperforms 85.31% of its industry peers.
ACGL's Return On Equity of 17.29% is fine compared to the rest of the industry. ACGL outperforms 77.62% of its industry peers.
With a decent Return On Invested Capital value of 3.96%, ACGL is doing good in the industry, outperforming 74.83% 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 4.08%.
The last Return On Invested Capital (3.96%) for ACGL is above the 3 year average (3.89%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.96% | ||
| ROE | 17.29% | ||
| ROIC | 3.96% |
ROA(3y)5.5%
ROA(5y)4.86%
ROE(3y)18.54%
ROE(5y)16.3%
ROIC(3y)3.89%
ROIC(5y)3.58%
1.3 Margins
ACGL has a Profit Margin of 21.09%. This is amongst the best in the industry. ACGL outperforms 91.61% of its industry peers.
ACGL's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 21.15%, ACGL belongs to the top of the industry, outperforming 82.52% of the companies in the same industry.
In the last couple of years the Operating Margin of ACGL has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 21.15% | ||
| PM (TTM) | 21.09% | ||
| GM | N/A |
OM growth 3Y4.67%
OM growth 5Y-2.93%
PM growth 3Y2.45%
PM growth 5Y1.58%
GM growth 3YN/A
GM growth 5YN/A
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so ACGL is destroying value.
ACGL has more shares outstanding than it did 1 year ago.
The number of shares outstanding for ACGL has been reduced compared to 5 years ago.
The debt/assets ratio for ACGL has been reduced compared to a year ago.
2.2 Solvency
ACGL has a debt to FCF ratio of 0.42. This is a very positive value and a sign of high solvency as it would only need 0.42 years to pay back of all of its debts.
ACGL has a Debt to FCF ratio of 0.42. This is amongst the best in the industry. ACGL outperforms 80.42% of its industry peers.
A Debt/Equity ratio of 0.13 indicates that ACGL is not too dependend on debt financing.
ACGL's Debt to Equity ratio of 0.13 is fine compared to the rest of the industry. ACGL outperforms 76.22% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.13 | ||
| Debt/FCF | 0.42 | ||
| Altman-Z | N/A |
ROIC/WACC0.46
WACC8.62%
2.3 Liquidity
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | N/A | ||
| Quick Ratio | N/A |
3. Growth
3.1 Past
The earnings per share for ACGL have decreased by -8.83% in the last year.
Measured over the past years, ACGL shows a very strong growth in Earnings Per Share. The EPS has been growing by 26.96% on average per year.
The Revenue has grown by 26.93% in the past year. This is a very strong growth!
ACGL shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 19.89% yearly.
EPS 1Y (TTM)-8.83%
EPS 3Y37.06%
EPS 5Y26.96%
EPS Q2Q%-37.14%
Revenue 1Y (TTM)26.93%
Revenue growth 3Y23.81%
Revenue growth 5Y19.89%
Sales Q2Q%10.53%
3.2 Future
ACGL is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 3.07% yearly.
The Revenue is expected to decrease by -1.73% on average over the next years.
EPS Next Y-13.99%
EPS Next 2Y0.81%
EPS Next 3Y3.07%
EPS Next 5YN/A
Revenue Next Year9.12%
Revenue Next 2Y7.68%
Revenue Next 3Y-1.73%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 10.65, which indicates a very decent valuation of ACGL.
Based on the Price/Earnings ratio, ACGL is valued a bit cheaper than the industry average as 62.94% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 27.53. ACGL is valued rather cheaply when compared to this.
The Price/Forward Earnings ratio is 9.45, which indicates a very decent valuation of ACGL.
The rest of the industry has a similar Price/Forward Earnings ratio as ACGL.
Compared to an average S&P500 Price/Forward Earnings ratio of 36.71, ACGL is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.65 | ||
| Fwd PE | 9.45 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, ACGL is valued a bit cheaper than 60.14% 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 71.33% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 5.11 | ||
| EV/EBITDA | 8.59 |
4.3 Compensation for Growth
ACGL has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)0.39
EPS Next 2Y0.81%
EPS Next 3Y3.07%
5. Dividend
5.1 Amount
ACGL has a Yearly Dividend Yield of 5.66%, which is a nice return.
ACGL's Dividend Yield is rather good when compared to the industry average which is at 3.38. ACGL pays more dividend than 88.81% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.34, ACGL pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.66% |
5.2 History
On average, the dividend of ACGL grows each year by 118.11%, which is quite nice.
ACGL does not have a reliable dividend history as it only pays dividend since a couple or years.
Dividend Growth(5Y)118.11%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
ACGL pays out 51.29% of its income as dividend. This is a bit on the high side, but may be sustainable.
ACGL's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP51.29%
EPS Next 2Y0.81%
EPS Next 3Y3.07%
89
+1.45 (+1.66%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners91.34%
Inst Owner Change-0.05%
Ins Owners3.13%
Ins Owner Change5.01%
Market Cap33.35B
Analysts79.09
Price Target111.61 (25.4%)
Short Float %1.11%
Short Ratio2.27
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.66% |
Yearly Dividend5.08
Dividend Growth(5Y)118.11%
DP51.29%
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)17.8%
Min EPS beat(2)14.08%
Max EPS beat(2)21.52%
EPS beat(4)3
Avg EPS beat(4)12.33%
Min EPS beat(4)-0.36%
Max EPS beat(4)21.52%
EPS beat(8)7
Avg EPS beat(8)17.99%
EPS beat(12)11
Avg EPS beat(12)25.11%
EPS beat(16)15
Avg EPS beat(16)27.97%
Revenue beat(2)0
Avg Revenue beat(2)-5.15%
Min Revenue beat(2)-6.02%
Max Revenue beat(2)-4.29%
Revenue beat(4)1
Avg Revenue beat(4)-3.68%
Min Revenue beat(4)-6.09%
Max Revenue beat(4)1.66%
Revenue beat(8)5
Avg Revenue beat(8)-0.6%
Revenue beat(12)7
Avg Revenue beat(12)1.17%
Revenue beat(16)9
Avg Revenue beat(16)0.88%
PT rev (1m)-2.84%
PT rev (3m)-4.32%
EPS NQ rev (1m)1.15%
EPS NQ rev (3m)-0.55%
EPS NY rev (1m)-0.18%
EPS NY rev (3m)0.92%
Revenue NQ rev (1m)-0.02%
Revenue NQ rev (3m)-2.24%
Revenue NY rev (1m)-0.08%
Revenue NY rev (3m)-2.16%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.65 | ||
| Fwd PE | 9.45 | ||
| P/S | 1.89 | ||
| P/FCF | 5.11 | ||
| P/OCF | 5.08 | ||
| P/B | 1.55 | ||
| P/tB | 1.65 | ||
| EV/EBITDA | 8.59 |
EPS(TTM)8.36
EY9.39%
EPS(NY)9.42
Fwd EY10.58%
FCF(TTM)17.4
FCFY19.55%
OCF(TTM)17.52
OCFY19.69%
SpS47.13
BVpS57.49
TBVpS54
PEG (NY)N/A
PEG (5Y)0.39
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.96% | ||
| ROE | 17.29% | ||
| ROCE | 5.01% | ||
| ROIC | 3.96% | ||
| ROICexc | 4.02% | ||
| ROICexgc | 5.41% | ||
| OM | 21.15% | ||
| PM (TTM) | 21.09% | ||
| GM | N/A | ||
| FCFM | 36.92% |
ROA(3y)5.5%
ROA(5y)4.86%
ROE(3y)18.54%
ROE(5y)16.3%
ROIC(3y)3.89%
ROIC(5y)3.58%
ROICexc(3y)3.95%
ROICexc(5y)3.65%
ROICexgc(3y)5.27%
ROICexgc(5y)4.8%
ROCE(3y)4.92%
ROCE(5y)4.54%
ROICexcg growth 3Y12.01%
ROICexcg growth 5Y3.19%
ROICexc growth 3Y11.28%
ROICexc growth 5Y2.52%
OM growth 3Y4.67%
OM growth 5Y-2.93%
PM growth 3Y2.45%
PM growth 5Y1.58%
GM growth 3YN/A
GM growth 5YN/A
F-Score6
Asset Turnover0.23
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.13 | ||
| Debt/FCF | 0.42 | ||
| Debt/EBITDA | 0.68 | ||
| Cap/Depr | 17.11% | ||
| Cap/Sales | 0.25% | ||
| Interest Coverage | 29.42 | ||
| Cash Conversion | 164.22% | ||
| Profit Quality | 175.04% | ||
| Current Ratio | N/A | ||
| Quick Ratio | N/A | ||
| Altman-Z | N/A |
F-Score6
WACC8.62%
ROIC/WACC0.46
Cap/Depr(3y)41.7%
Cap/Depr(5y)46.55%
Cap/Sales(3y)0.41%
Cap/Sales(5y)0.43%
Profit Quality(3y)182.15%
Profit Quality(5y)183.38%
High Growth Momentum
Growth
EPS 1Y (TTM)-8.83%
EPS 3Y37.06%
EPS 5Y26.96%
EPS Q2Q%-37.14%
EPS Next Y-13.99%
EPS Next 2Y0.81%
EPS Next 3Y3.07%
EPS Next 5YN/A
Revenue 1Y (TTM)26.93%
Revenue growth 3Y23.81%
Revenue growth 5Y19.89%
Sales Q2Q%10.53%
Revenue Next Year9.12%
Revenue Next 2Y7.68%
Revenue Next 3Y-1.73%
Revenue Next 5YN/A
EBIT growth 1Y7.85%
EBIT growth 3Y29.6%
EBIT growth 5Y16.38%
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y56.19%
FCF growth 3Y25.05%
FCF growth 5Y26.92%
OCF growth 1Y55.37%
OCF growth 3Y24.87%
OCF growth 5Y26.64%