On Jul 18, Zacks Investment Research upgraded
Arch Capital Group Ltd.
) by a notch to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Arch Capital has been witnessing rising earnings estimates on
the back of improving core businesses. A diversified product
portfolio and healthy capital position have been supported by
bullish market trends in the near past.
Additionally, this property-casualty reinsurer delivered
positive earnings surprises in three of the last four quarters with
an average beat of 10.2%.
On May 1, Arch Capital reported first-quarter 2014 operating
earnings per share (EPS) of $1.20, 15.4% higher than the Zacks
Consensus Estimate of $1.04. EPS was also higher than year-ago
figure of $1.17.
The upside was driven by 14.2% year-over-year growth in premiums
and 13.8% upsurge in underwriting income along with stable combined
ratio and net investment yield, despite the prevalent low interest
environment. These were partially offset by higher expenses.
Subsequently, the book value per share improved 4.3% during the
Arch Capital enjoys fair liquidity and risk-adjusted capital,
thereby supporting a low-risk balance sheet. Going ahead, sturdy
fundamentals and profitable writing of mortgage and insurance
businesses are expected to mitigate market risks and drive
operating leverage in the upcoming quarters, instilling a positive
sentiment among investors.
Upward estimate revisions witnessed by Arch Capital also reflect
optimism. The Zacks Consensus Estimate for 2014 and 2015 rose 3.6%
and 2.0% to $3.79 and $3.60 per share in the last 60 days,
respectively. Notably, no downward estimate revision was witnessed
for both the years.
Moreover, the Most Accurate estimate for Arch Capital's 2014 and
2015 earnings currently stand at $3.84 and $3.83 a share,
translating into an
of +1.3% and +6.4%, respectively. This indicates earnings beat
possibilities for this year and the next.
Other Stocks to Consider
Investors interested in the insurance industry could consider
well-performing stocks like
Manulife Financial Corp.
Greenlight Capital Re Ltd.
Endurance Specialty Holdings Ltd.
) with the same Zacks Rank as Arch Capital.
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ARCH CAP GP LTD (ACGL): Free Stock Analysis
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