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 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.
ACGL had positive earnings in each of the past 5 years.
In the past 5 years ACGL always reported a positive cash flow from operatings.
1.2 Ratios
ACGL has a Return On Assets of 4.96%. This is amongst the best in the industry. ACGL outperforms 86.01% of its industry peers.
With a decent Return On Equity value of 17.29%, ACGL is doing good in the industry, outperforming 79.72% of the companies in the same industry.
With a decent Return On Invested Capital value of 3.96%, ACGL is doing good in the industry, outperforming 75.52% 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 4.07%.
The 3 year average ROIC (3.89%) for ACGL is below the current ROIC(3.96%), indicating increased profibility in the last year.
| 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 better Profit Margin (21.09%) than 90.21% of its industry peers.
ACGL's Profit Margin has improved in the last couple of years.
ACGL has a better Operating Margin (21.15%) than 81.12% of its industry peers.
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
ACGL has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, ACGL has more shares outstanding
Compared to 5 years ago, ACGL has less shares outstanding
Compared to 1 year ago, ACGL has an improved debt to assets ratio.
2.2 Solvency
ACGL has a debt to FCF ratio of 0.42. 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.
With an excellent Debt to FCF ratio value of 0.42, ACGL belongs to the best of the industry, outperforming 80.42% of the companies in the same industry.
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 | 0.42 | ||
| Altman-Z | N/A |
ROIC/WACC0.42
WACC9.37%
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
Based on estimates for the next years, ACGL will show a small growth in Earnings Per Share. The EPS will grow by 3.09% on average per year.
Based on estimates for the next years, ACGL will show a decrease in Revenue. The Revenue will decrease by -1.68% on average per year.
EPS Next Y-13.94%
EPS Next 2Y1.41%
EPS Next 3Y3.09%
EPS Next 5YN/A
Revenue Next Year9.21%
Revenue Next 2Y7.76%
Revenue Next 3Y-1.68%
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 10.88, the valuation of ACGL can be described as very reasonable.
61.54% of the companies in the same industry are more expensive than ACGL, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of ACGL to the average of the S&P500 Index (26.31), we can say ACGL is valued rather cheaply.
ACGL is valuated reasonably with a Price/Forward Earnings ratio of 9.55.
The rest of the industry has a similar Price/Forward Earnings ratio as ACGL.
ACGL's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 22.13.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.88 | ||
| Fwd PE | 9.55 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ACGL is on the same level as its industry peers.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of ACGL indicates a somewhat cheap valuation: ACGL is cheaper than 68.53% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 5.23 | ||
| EV/EBITDA | 8.91 |
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)0.4
EPS Next 2Y1.41%
EPS Next 3Y3.09%
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 3.31. ACGL pays more dividend than 86.71% of the companies in the same industry.
ACGL's Dividend Yield is rather good when compared to the S&P500 average which is at 2.40.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.5% |
5.2 History
On average, the dividend of ACGL grows each year by 118.11%, which is quite nice.
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
51.29% of the earnings are spent on dividend by ACGL. 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 2Y1.41%
EPS Next 3Y3.09%
90.99
-0.92 (-1%)
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 Cap34.10B
Analysts80.91
Price Target114.87 (26.24%)
Short Float %1.06%
Short Ratio2.35
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 5.5% |
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)1.49%
PT rev (3m)-2.68%
EPS NQ rev (1m)-0.09%
EPS NQ rev (3m)-2.34%
EPS NY rev (1m)0%
EPS NY rev (3m)-0.29%
Revenue NQ rev (1m)-0.82%
Revenue NQ rev (3m)-2.22%
Revenue NY rev (1m)-1.05%
Revenue NY rev (3m)-2.01%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 10.88 | ||
| Fwd PE | 9.55 | ||
| P/S | 1.93 | ||
| P/FCF | 5.23 | ||
| P/OCF | 5.19 | ||
| P/B | 1.58 | ||
| P/tB | 1.68 | ||
| EV/EBITDA | 8.91 |
EPS(TTM)8.36
EY9.19%
EPS(NY)9.53
Fwd EY10.48%
FCF(TTM)17.4
FCFY19.13%
OCF(TTM)17.52
OCFY19.26%
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
WACC9.37%
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-13.94%
EPS Next 2Y1.41%
EPS Next 3Y3.09%
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 2Y7.76%
Revenue Next 3Y-1.68%
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%