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Reasons Why Arch Capital (ACGL) Stock is a Solid Pick Now

Arch Capital Group Ltd. ACGL remains well-poised for growth, driven by rate increases, new business opportunities, growth in existing accounts and increased persistency.

Growth Projections

The Zacks Consensus Estimate for 2022 and 2023 earnings per share is pegged at $4.58 and $5.33, indicating year-over-year increases of 27.8% and 16.3%, respectively. The expected long-term earnings growth rate is pegged at 10%.

Northbound Estimate Revision

Estimates for 2022 and 2023 have moved up nearly 6.7% and 5.7%, respectively, in the past 30 days, reflecting investor optimism.

Earnings Surprise History

Arch Capital surpassed earnings estimates in three of the last four quarters and missed in one, the average being 33.64%.

Zacks Rank & Price Performance

Arch Capital currently carries a Zacks Rank #1 (Strong Buy). In the past year, the stock has rallied 12.1% against the industry’s decline of 3.1%.


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Return on Equity (ROE)

Arch Capital’s ROE for the trailing 12 months is 14.4%, up 650 basis points year over year and reflecting its efficiency in utilizing shareholders’ funds. 

Business Tailwinds

Premiums in the Insurance segment stand to gain from growth in professional lines and property. Rate increases, new business opportunities and growth in existing accounts, and in travel, primarily due to new business and growth in existing accounts, are expected to boost the segment.

The reinsurance segment should continue to deliver solid top-line growth and earnings owing to the diversified and specialty focus of the reinsurance business. Increases in other specialty, property catastrophe and property, primarily due to rate increases, new business opportunities and growth in existing accounts, should benefit this segment.

The mortgage segment stands to benefit from increased persistency of enforce insurance, and growth in credit risk transfer portfolio.

Improving underwriting results in most of the lines, favorable prior year development and higher premium earned continue to improve the underlying combined ratio.

This leading specialty property and casualty and mortgage insurer actively pursues acquisitions to expand internationally, enhance capabilities, boost operations and diversify the business. The acquisitions are likely to boost its insurance solutions and strengthen its position as the only globally diversified insurer of mortgage credit risk.

This P&C insurer boasts an impressive solvency level. Cash flow from operations is likely to gain from higher premiums.

Other Stocks to Consider

Some other top-ranked stocks from the property and casualty insurance industry are W.R. Berkley Corporation WRB, American Financial Group, Inc. AFG and ProAssurance Corporation PRA, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 29.95%. In the past year, W.R. Berkley stock has increased 33%.

The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings per share indicates year-over-year increases of 50.6% and 10.4%, respectively.

American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 37.09%. In the past year, American Financial has lost 1.7%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 2.2% and 3.3% north, respectively, in the past seven days.

The bottom line of ProAssurance surpassed earnings estimates in three of the last four quarters and missed in one, the average being 150.9%. In the past year, the insurer has lost 4.4%.

The Zacks Consensus Estimate for ProAssurance’s 2022 and 2023 earnings has moved 16.9% and 13.9% north, respectively, in the past seven days.




Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
W.R. Berkley Corporation (WRB): Free Stock Analysis Report
 
ProAssurance Corporation (PRA): Free Stock Analysis Report
 
American Financial Group, Inc. (AFG): Free Stock Analysis Report
 
Arch Capital Group Ltd. (ACGL): Free Stock Analysis Report
 
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