ARCH CAPITAL GROUP LTD (ACGL) Stock Fundamental Analysis
NASDAQ:ACGL - Nasdaq - BMG0450A1053 - Common Stock - Currency: USD
Overall ACGL gets a fundamental rating of 5 out of 10. We evaluated ACGL against 143 industry peers in the Insurance industry. While ACGL has a great profitability rating, 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
In the past year ACGL was profitable.
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
With an excellent Return On Assets value of 6.02%, ACGL belongs to the best of the industry, outperforming 87.41% of the companies in the same industry.
ACGL has a better Return On Equity (20.52%) than 82.52% of its industry peers.
ACGL has a Return On Invested Capital of 4.43%. This is in the better half of the industry: ACGL outperforms 75.52% 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 4.47%.
The 3 year average ROIC (3.89%) for ACGL is below the current ROIC(4.43%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.02% | ||
| ROE | 20.52% | ||
| ROIC | 4.43% |
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's Profit Margin of 25.42% is amongst the best of the industry. ACGL outperforms 93.01% of its industry peers.
ACGL's Profit Margin has improved in the last couple of years.
ACGL has a Operating Margin of 23.55%. This is amongst the best in the industry. ACGL outperforms 84.62% of its industry peers.
ACGL's Operating Margin has declined in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 23.55% | ||
| PM (TTM) | 25.42% | ||
| 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.
Compared to 1 year ago, ACGL has more shares outstanding
The number of shares outstanding for ACGL has been reduced compared to 5 years ago.
Compared to 1 year ago, ACGL has an improved debt to assets ratio.
2.2 Solvency
ACGL has a debt to FCF ratio of 0.41. This is a very positive value and a sign of high solvency as it would only need 0.41 years to pay back of all of its debts.
ACGL's Debt to FCF ratio of 0.41 is amongst the best of the industry. ACGL outperforms 83.22% of its industry peers.
A Debt/Equity ratio of 0.13 indicates that ACGL is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.13, ACGL is in the better half of the industry, outperforming 76.92% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.13 | ||
| Debt/FCF | 0.41 | ||
| Altman-Z | N/A |
ROIC/WACC0.51
WACC8.65%
2.3 Liquidity
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | N/A | ||
| Quick Ratio | N/A |
3. Growth
3.1 Past
ACGL shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 9.70%, which is quite good.
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.
ACGL shows a strong growth in Revenue. In the last year, the Revenue has grown by 27.08%.
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)9.7%
EPS 3Y37.06%
EPS 5Y26.96%
EPS Q2Q%-9.24%
Revenue 1Y (TTM)27.08%
Revenue growth 3Y23.81%
Revenue growth 5Y19.89%
Sales Q2Q%17.11%
3.2 Future
ACGL is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 3.29% yearly.
ACGL is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.01% yearly.
EPS Next Y-14.78%
EPS Next 2Y2.2%
EPS Next 3Y3.29%
EPS Next 5YN/A
Revenue Next Year11.53%
Revenue Next 2Y9.39%
Revenue Next 3Y7.01%
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 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
A Price/Earnings ratio of 9.94 indicates a reasonable valuation of ACGL.
Compared to the rest of the industry, the Price/Earnings ratio of ACGL indicates a somewhat cheap valuation: ACGL is cheaper than 67.83% of the companies listed in the same industry.
ACGL's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 28.92.
With a Price/Forward Earnings ratio of 11.66, the valuation of ACGL can be described as very reasonable.
ACGL's Price/Forward Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.65, ACGL is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.94 | ||
| Fwd PE | 11.66 |
4.2 Price Multiples
61.54% of the companies in the same industry are more expensive than ACGL, based on the Enterprise Value to EBITDA ratio.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of ACGL indicates a somewhat cheap valuation: ACGL is cheaper than 69.23% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 5.23 | ||
| EV/EBITDA | 8.67 |
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)0.37
EPS Next 2Y2.2%
EPS Next 3Y3.29%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 5.40%, ACGL is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 3.28, ACGL pays a better dividend. On top of this ACGL pays more dividend than 86.01% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.51, ACGL pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.4% |
5.2 History
The dividend of ACGL is nicely growing with an annual growth rate of 118.11%!
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 44.62% 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.
DP44.62%
EPS Next 2Y2.2%
EPS Next 3Y3.29%
92.1
-0.41 (-0.44%)
Chartmill FA Rating
GICS SectorFinancials
GICS IndustryGroupInsurance
GICS IndustryInsurance
Earnings (Last)
Earnings (Next)
Inst Owners91.35%
Inst Owner Change0.29%
Ins Owners3.1%
Ins Owner Change9.3%
Market Cap34.60B
Analysts80.87
Price Target116.64 (26.64%)
Short Float %1.23%
Short Ratio2.48
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.4% |
Yearly Dividend5.08
Dividend Growth(5Y)118.11%
DP44.62%
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)10.58%
Min EPS beat(2)-0.36%
Max EPS beat(2)21.52%
EPS beat(4)3
Avg EPS beat(4)12.44%
Min EPS beat(4)-0.36%
Max EPS beat(4)21.52%
EPS beat(8)7
Avg EPS beat(8)18.38%
EPS beat(12)11
Avg EPS beat(12)24.08%
EPS beat(16)15
Avg EPS beat(16)28.83%
Revenue beat(2)1
Avg Revenue beat(2)-1.31%
Min Revenue beat(2)-4.29%
Max Revenue beat(2)1.66%
Revenue beat(4)2
Avg Revenue beat(4)-1.05%
Min Revenue beat(4)-6.09%
Max Revenue beat(4)4.53%
Revenue beat(8)6
Avg Revenue beat(8)1.08%
Revenue beat(12)7
Avg Revenue beat(12)-0.54%
Revenue beat(16)9
Avg Revenue beat(16)0.84%
PT rev (1m)-1.17%
PT rev (3m)-5.54%
EPS NQ rev (1m)-8.45%
EPS NQ rev (3m)-45.52%
EPS NY rev (1m)-1.26%
EPS NY rev (3m)-13.98%
Revenue NQ rev (1m)-0.21%
Revenue NQ rev (3m)0.31%
Revenue NY rev (1m)0.07%
Revenue NY rev (3m)-0.88%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 9.94 | ||
| Fwd PE | 11.66 | ||
| P/S | 2.06 | ||
| P/FCF | 5.23 | ||
| P/OCF | 5.19 | ||
| P/B | 1.66 | ||
| P/tB | 1.78 | ||
| EV/EBITDA | 8.67 |
EPS(TTM)9.27
EY10.07%
EPS(NY)7.9
Fwd EY8.58%
FCF(TTM)17.62
FCFY19.14%
OCF(TTM)17.76
OCFY19.28%
SpS44.72
BVpS55.41
TBVpS51.82
PEG (NY)N/A
PEG (5Y)0.37
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.02% | ||
| ROE | 20.52% | ||
| ROCE | 5.61% | ||
| ROIC | 4.43% | ||
| ROICexc | 4.49% | ||
| ROICexgc | 6.02% | ||
| OM | 23.55% | ||
| PM (TTM) | 25.42% | ||
| GM | N/A | ||
| FCFM | 39.41% |
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 Turnover0.24
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.13 | ||
| Debt/FCF | 0.41 | ||
| Debt/EBITDA | 0.65 | ||
| Cap/Depr | 21.7% | ||
| Cap/Sales | 0.3% | ||
| Interest Coverage | 31.16 | ||
| Cash Conversion | 159.18% | ||
| Profit Quality | 155.01% | ||
| Current Ratio | N/A | ||
| Quick Ratio | N/A | ||
| Altman-Z | N/A |
F-Score6
WACC8.65%
ROIC/WACC0.51
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)9.7%
EPS 3Y37.06%
EPS 5Y26.96%
EPS Q2Q%-9.24%
EPS Next Y-14.78%
EPS Next 2Y2.2%
EPS Next 3Y3.29%
EPS Next 5YN/A
Revenue 1Y (TTM)27.08%
Revenue growth 3Y23.81%
Revenue growth 5Y19.89%
Sales Q2Q%17.11%
Revenue Next Year11.53%
Revenue Next 2Y9.39%
Revenue Next 3Y7.01%
Revenue Next 5YN/A
EBIT growth 1Y24.98%
EBIT growth 3Y29.6%
EBIT growth 5Y16.38%
EBIT Next YearN/A
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y16.24%
FCF growth 3Y25.05%
FCF growth 5Y26.92%
OCF growth 1Y16.07%
OCF growth 3Y24.87%
OCF growth 5Y26.64%