Arch Capital Group Ltd. provides property, casualty, and mortgage insurance and reinsurance products worldwide. The Company operates in two underwriting segments: insurance and reinsurance and mortgage. The company was founded in 1995 and is based in Pembroke, Bermuda.
ACGL Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Arch Capital Group Ltd with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Arch Capital Group Ltd ranked in the 75th percentile in terms of potential gain offered. Specifically, our DCF analysis implies the stock is trading below its fair value by an estimated 369.67%. In terms of the factors that were most noteworthy in this DCF analysis for ACGL, they are:
The company has produced more trailing twelve month cash flow than 87.95% of its sector Financial Services.
Arch Capital Group Ltd's weighted average cost of capital (WACC) is 8%; for context, that number is higher than merely 17.35% of tickers in our DCF set.
ACGL's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than merely 17.35% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Financial Services that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as ACGL, try GNW, FAF, HIG, CPTA, and DGICA.
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