Why You Should Stay Invested in Arch Capital (ACGL) Stock

Core Viewpoint - Arch Capital Group Ltd. (ACGL) presents new business opportunities, rate improvements, growth in existing accounts, favorable estimates, and a solid capital position, making it a worthy addition to investment portfolios [1] Growth Projections - The Zacks Consensus Estimate for Arch Capital's 2024 earnings per share indicates a 1.18% increase from the previous year, with revenues projected at $16 billion, reflecting an 18.5% year-over-year improvement [2] - For 2025, earnings per share and revenues are expected to increase by 6.4% and 13.7%, respectively, compared to 2024 estimates [2] - Earnings have grown by 32.3% over the past five years, outperforming the industry average of 10.5% [2] Northbound Estimate Revision - The Zacks Consensus Estimate for 2024 and 2025 earnings has increased by 1.42% and 1.56%, respectively, in the last 60 days, indicating analysts' optimism [3] Earnings Surprise History - Arch Capital has exceeded earnings estimates in each of the last four quarters, with an average surprise of 28.41% [4] Zacks Rank & Price Performance - ACGL currently holds a Zacks Rank 3 (Hold) and has seen a stock price increase of 29.1% over the past year, compared to the industry's growth of 19.1% [5] Style Score - Arch Capital has a VGM Score of A, indicating attractive value, strong growth, and promising momentum [7] Return on Equity - The annualized return on equity for Arch Capital is 24.6%, which is 230 basis points higher year-over-year and significantly above the industry average of 7.8% [8] Business Tailwinds - Arch Capital benefits from new business opportunities, rate increases, growth in existing accounts, and expansion in Australian single-premium mortgage insurance [9] - The company is pursuing inorganic growth through acquisitions, enhancing operations, and diversifying its business, including a recent agreement to acquire Allianz's U.S. MidCorp and Entertainment insurance business [9] Financial Strength - Investment income is expected to improve due to a growing base of invested assets and strong cash flows [10] - Arch Capital has a robust balance sheet characterized by high liquidity and low leverage, which supports growth initiatives [10] - The company has maintained a free cash flow conversion rate of over 85% in recent quarters, reflecting solid earnings [10] - Long-term earnings growth is projected at 6.8%, with a Growth Score of B [10]