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Arch Capital Group Ltd. ACGL has been trading above its 50-day simple moving average (SMA), signaling a short-term bullish trend. Its share price as of Monday was $95.28, down 18.2% from its 52-week high of $116.47.
The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend.
New business opportunities, rate improvement, growth in existing accounts and a solid capital position are driving this leading specialty P&C and mortgage insurer.
ACGL Stock Price Movement vs. 50-Day Moving Average
Image Source: Zacks Investment Research
Shares of ACGL have gained 2.7% year to date compared with the industry and the Finance sector’s growth of 14% and 2.2%, respectively. Shares of ACGL have outperformed the Zacks S&P 500 composite’s decline of 4% in the same time frame. With a market capitalization of $35.8 billion, the average volume of shares traded in the last three months was 1.9 million.
ACGL Stock Price vs Industry, Sector & S&P 500 YTD
Image Source: Zacks Investment Research
Average Target Price for ACGL Suggests an Upside
Based on short-term price targets offered by 16 analysts, the Zacks average price target is $113.38 per share. The average suggests a potential 19% upside from Monday’s closing price.
Bearish Analyst Sentiment on ACGL
The Zacks Consensus Estimate for 2025 earnings has moved down 3.1% in the past 30 days, while the same for 2026 has moved down 0.8% in the same time frame.
Favorable Return on Capital
Return on equity in the trailing 12 months was 19%, better than the industry average of 8.3%. This highlights the company’s efficiency in utilizing shareholders’ funds.
Also, the return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame. This reflects ACGL’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 6.9%, better than the industry average of 6.4%.
Factors Favoring ACGL Stock
Widespread operations, coupled with a compelling product portfolio, provide meaningful diversification and earnings stability to ACGL.
Arch Capital has made significant efforts to boost its inorganic growth through prudent acquisitions. These, in turn, aided international expansion, enhance operations and diversify business at attractive risk-adjusted returns.
Solid performances at the Insurance as well as the Reinsurance business are well complemented by the Mortgage Insurance. Premiums should benefit from new business opportunities, rate increases, and growth in existing accounts.
Investment results are set to benefit from a growing base of invested assets, driven by improving cash flows.
Sufficient liquidity, coupled with low leverage, has helped ACGL strengthen its balance. It also shields it from market volatility and supports growth initiatives.
Notably, its free cash flow conversion has remained more than 85% over the last many quarters, reflecting its solid earnings.