Arch Capital Trades Above 50-Day SMA: Time to Hold ACGL Stock?

Core Viewpoint - Arch Capital Group Ltd. (ACGL) is currently experiencing a short-term bullish trend, trading above its 50-day simple moving average, despite a significant decline from its 52-week high [1]. Price Performance - ACGL's share price is $94.59, down 18.7% from its 52-week high of $116.47 [1]. - Over the past year, ACGL shares have gained 2.4%, underperforming the industry growth of 12.8% and the Finance sector's growth of 6.3%, but outperforming the Zacks S&P 500 composite return of 0.6% [4][5]. Valuation Metrics - ACGL is trading at a forward 12-month price-to-book ratio of 1.72X, above the industry average of 1.58X, indicating an expensive valuation [6]. - The company has a Value Score of B, suggesting a relatively attractive valuation compared to peers [6]. Profitability - Arch Capital's trailing 12-month return on equity is 15.7%, significantly higher than the industry average of 7.8%, reflecting effective utilization of shareholders' equity [9]. Growth Projections - The Zacks Consensus Estimate for Arch Capital's 2025 revenues is $18.88 billion, representing a year-over-year improvement of 13.5% [10]. - For 2026, the consensus estimates indicate a year-over-year increase of 20.3% in earnings per share and 5.8% in revenues from the 2025 estimates [10]. - Earnings have grown by 33.5% over the past five years, outperforming the industry average of 18.9% [10]. Earnings Performance - Arch Capital has consistently surpassed earnings estimates in the last four quarters, with an average surprise of 13.93% [11]. Business Strengths - The company benefits from widespread operations and a compelling product portfolio, providing diversification and earnings stability [12]. - Significant efforts in inorganic growth through acquisitions have aided international expansion and enhanced operations [12]. - Solid performances in both the Insurance and Reinsurance segments, complemented by Mortgage Insurance, are expected to drive premium growth [13]. Financial Health - ACGL has maintained a free cash flow conversion rate of over 85% in recent quarters, indicating strong earnings [14]. - The company enjoys sufficient liquidity and low leverage, which strengthens its balance sheet and supports growth initiatives [13]. Final Assessment - Arch Capital has a robust product portfolio and a solid track record of premium growth, with expectations for continued growth across its business lines [15]. - The company has a VGM Score of B, indicating attractive value, growth, and momentum [17].