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 144 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 decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
ACGL had positive earnings in the past year.
ACGL had a positive operating cash flow in the past year.
Each year in the past 5 years ACGL has 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 85.42% of its industry peers.
ACGL has a better Return On Equity (17.29%) than 78.47% of its industry peers.
ACGL has a better Return On Invested Capital (3.96%) than 75.69% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for ACGL is in line with the industry average of 4.07%.
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
The Profit Margin of ACGL (21.09%) is better than 89.58% 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 80.56% 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
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.
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's Debt to FCF ratio of 0.42 is amongst the best of the industry. ACGL outperforms 80.56% of its industry peers.
A Debt/Equity ratio of 0.13 indicates that ACGL is not too dependend on debt financing.
With a decent Debt to Equity ratio value of 0.13, ACGL is doing good in the industry, outperforming 76.39% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.13 | ||
| Debt/FCF | 0.42 | ||
| Altman-Z | N/A |
ROIC/WACC0.42
WACC9.35%
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.
ACGL shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 26.96% yearly.
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
Based on estimates for the next years, ACGL will show a small growth in Earnings Per Share. The EPS will grow by 2.96% on average per year.
ACGL is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -1.71% yearly.
EPS Next Y-13.84%
EPS Next 2Y1.22%
EPS Next 3Y2.96%
EPS Next 5YN/A
Revenue Next Year9.21%
Revenue Next 2Y7.74%
Revenue Next 3Y-1.71%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 10.89, 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 62.50% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 27.15. ACGL is valued rather cheaply when compared to this.
Based on the Price/Forward Earnings ratio of 9.59, the valuation of ACGL can be described as reasonable.
The rest of the industry has a similar Price/Forward Earnings ratio as ACGL.
When comparing the Price/Forward Earnings ratio of ACGL to the average of the S&P500 Index (21.60), we can say ACGL is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.89 | ||
| Fwd PE | 9.59 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ACGL indicates a somewhat cheap valuation: ACGL is cheaper than 60.42% of the companies listed in the same industry.
ACGL's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. ACGL is cheaper than 68.75% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 5.23 | ||
| EV/EBITDA | 8.92 |
4.3 Compensation for Growth
The decent profitability rating of ACGL may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)0.4
EPS Next 2Y1.22%
EPS Next 3Y2.96%
5. Dividend
5.1 Amount
ACGL has a Yearly Dividend Yield of 5.54%, which is a nice return.
ACGL's Dividend Yield is rather good when compared to the industry average which is at 3.51. ACGL pays more dividend than 85.42% of the companies in the same industry.
Compared to an average S&P500 Dividend Yield of 2.42, ACGL pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.54% |
5.2 History
The dividend of ACGL is nicely growing with an annual growth rate of 118.11%!
ACGL is new to the dividend game and has less than 3 years of track record.
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.
The dividend of ACGL is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP51.29%
EPS Next 2Y1.22%
EPS Next 3Y2.96%
91.05
+0.73 (+0.81%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners91.34%
Inst Owner Change1.02%
Ins Owners3.13%
Ins Owner Change5.01%
Market Cap34.12B
Analysts80.91
Price Target114.4 (25.65%)
Short Float %1.04%
Short Ratio2.35
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.54% |
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)1.08%
PT rev (3m)-3.08%
EPS NQ rev (1m)-0.02%
EPS NQ rev (3m)-2.04%
EPS NY rev (1m)0.12%
EPS NY rev (3m)0.21%
Revenue NQ rev (1m)-0.18%
Revenue NQ rev (3m)-2.22%
Revenue NY rev (1m)-1.05%
Revenue NY rev (3m)-2.01%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.89 | ||
| Fwd PE | 9.59 | ||
| P/S | 1.93 | ||
| P/FCF | 5.23 | ||
| P/OCF | 5.2 | ||
| P/B | 1.58 | ||
| P/tB | 1.69 | ||
| EV/EBITDA | 8.92 |
EPS(TTM)8.36
EY9.18%
EPS(NY)9.5
Fwd EY10.43%
FCF(TTM)17.4
FCFY19.11%
OCF(TTM)17.52
OCFY19.25%
SpS47.13
BVpS57.49
TBVpS54
PEG (NY)N/A
PEG (5Y)0.4
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
WACC9.35%
ROIC/WACC0.42
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-13.84%
EPS Next 2Y1.22%
EPS Next 3Y2.96%
EPS Next 5YN/A
Revenue 1Y (TTM)26.93%
Revenue growth 3Y23.81%
Revenue growth 5Y19.89%
Sales Q2Q%10.53%
Revenue Next Year9.21%
Revenue Next 2Y7.74%
Revenue Next 3Y-1.71%
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%