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Arch Capital Group Ltd. (ACGL) is a Hamilton, Bermuda-based insurance company with a market cap of $38.7 billion. It provides a broad spectrum of products and services, including primary and excess casualty, professional indemnity, workers' compensation, umbrella, and employers' liability insurance.
Shares of this leading diversified insurer have outperformed the broader market considerably over the past year. ACGL has gained 36.6% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 28.1%. In 2024, ACGL stock is up 38.4%, surpassing SPX’s 17.3% rise on a YTD basis.
Zooming in further, ACGL has also surpassed the iShares U.S. Insurance ETF (IAK). The exchange-traded fund has gained about 35.8% over the past year. Moreover, ACGL’s gains on a YTD basis outshine the ETF’s 22.1% returns over the same time frame.
On Jul. 30, ACGL rose 1.2% following the release of its Q2 earnings report. Its EPS of $2.57 exceeded the consensus estimates. The insurance company posted $364 million in net investment income, and its underwriting income rose 25.7% year over year to $762 million.
Additionally, on Jul. 22, the company secured regulatory approval to acquire Allianz's U.S. MidCorp and Entertainment businesses, further enhancing its market presence. ACGL surged marginally after the announcement.
For the current fiscal year, ending in December, analysts expect Arch Capital’s EPS to grow 6.5% to $9 on a diluted basis. The company’s earnings surprise history is solid. It beat the consensus estimate in each of the last four quarters.
Among the 17 analysts covering ACGL stock, the consensus is a “Moderate Buy.” That’s based on 10 “Strong Buy” ratings, two “Moderate Buy,” four “Holds,” and one “Strong Sell.”
This configuration is more bullish than two months ago, with nine analysts suggesting a “Strong Buy.”
On August 12, Wells Fargo & Company (WFC) analyst Elyse Greenspan lowered the price target for Arch Capital from $111 to $110 while maintaining an “Overweight” rating. Despite the reduction, the firm highlighted Arch Capital's strong financial performance, noting a solid bottom-line beat driven by robust reinsurance margins, ongoing mortgage insurance (MI) reserve releases, and increased net interest income.
The mean price target of $111 suggests an 8% premium to AGCL from current levels. The Street-high price target of $121 suggests an upside potential of 17.7%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
