Value
8.2/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.5 |
| P/S | 9.1 |
| EV/EBITDA | 8.2 |
| Fwd P/E | 9.2 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 10.5x
- ▸PEG: 0.11
- ▸Attractively valued
ACGL · Why this verdict
Why Arch Capital Group (ACGL) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score6.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Arch Capital combines an attractive forward multiple of 9.3 times earnings with four straight quarterly beats averaging 19% and strong 25% net margins, but only about 7% headroom remains to the near-term price target — a thin margin that justifies holding an existing position but not aggressively adding.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At a forward P/E of 9.3 times and a PEG ratio of 0.10, the stock screens attractively valued relative to both its earnings growth rate and sector peers — a combination that offers a margin of safety at current prices. Valuation breakdown | The valuation gap closes over 12 months as price approaches the $97.84 target, implying roughly 7% appreciation. | Tripped→Stable |
| CounterRevenue has declined approximately 3% year-over-year, which may justify a compressed multiple; if premium volume softens further, the low PEG may reflect slower normalized growth rather than genuine undervaluation. | ||
The company has beaten consensus in each of the last four quarters, with an average positive surprise of roughly 19%, indicating disciplined underwriting and reserving practices that consistently produce results above investor expectations. Earnings | EPS continues to beat consensus in the next 2 reported quarters, sustaining the streak. | →Stable |
| CounterThe most recent beat was narrow — actual $2.50 versus estimate $2.46, a 1.5% surprise — suggesting the beat streak may be narrowing as estimate calibration catches up to underlying earnings power. | ||
Net margins of 25% and a Piotroski F-Score of 7 out of 9 reflect a financially sound business with improving balance sheet health, supporting both the earnings beat streak and the valuation case. Quality breakdown | Net margins sustain above 20% for the next 4 quarters, confirming the quality of the franchise. | →Stable |
| CounterReturn on assets is modest, suggesting margins may be partially driven by favorable reserve releases or investment income that could compress in a normalized rate or elevated catastrophe-loss environment. | ||
With only about 7% headroom to the near-term price target and a reward-to-risk ratio of 1.4-to-1 — just at the floor of the acceptable range — the setup justifies holding an existing position but does not offer enough geometric upside to warrant fresh buying. Engine gate (failed) | A pullback to below $88 would need to materialize to create a more attractive entry with upside exceeding 12%. | →Stable |
| CounterThe 200-day moving average slope is still rising at 0.5% per month despite the price dipping below it, suggesting the pullback is temporary and the primary trend remains intact — the thin upside may be resolved quickly as price reverts to trend. | ||
At a forward P/E of 9.3 times and a PEG ratio of 0.10, the stock screens attractively valued relative to both its earnings growth rate and sector peers — a combination that offers a margin of safety at current prices.
Tripped→StableValuation breakdown
- Expectation
- The valuation gap closes over 12 months as price approaches the $97.84 target, implying roughly 7% appreciation.
CounterRevenue has declined approximately 3% year-over-year, which may justify a compressed multiple; if premium volume softens further, the low PEG may reflect slower normalized growth rather than genuine undervaluation.
The company has beaten consensus in each of the last four quarters, with an average positive surprise of roughly 19%, indicating disciplined underwriting and reserving practices that consistently produce results above investor expectations.
→StableEarnings
- Expectation
- EPS continues to beat consensus in the next 2 reported quarters, sustaining the streak.
CounterThe most recent beat was narrow — actual $2.50 versus estimate $2.46, a 1.5% surprise — suggesting the beat streak may be narrowing as estimate calibration catches up to underlying earnings power.
Net margins of 25% and a Piotroski F-Score of 7 out of 9 reflect a financially sound business with improving balance sheet health, supporting both the earnings beat streak and the valuation case.
→StableQuality breakdown
- Expectation
- Net margins sustain above 20% for the next 4 quarters, confirming the quality of the franchise.
CounterReturn on assets is modest, suggesting margins may be partially driven by favorable reserve releases or investment income that could compress in a normalized rate or elevated catastrophe-loss environment.
With only about 7% headroom to the near-term price target and a reward-to-risk ratio of 1.4-to-1 — just at the floor of the acceptable range — the setup justifies holding an existing position but does not offer enough geometric upside to warrant fresh buying.
→StableEngine gate (failed)
- Expectation
- A pullback to below $88 would need to materialize to create a more attractive entry with upside exceeding 12%.
CounterThe 200-day moving average slope is still rising at 0.5% per month despite the price dipping below it, suggesting the pullback is temporary and the primary trend remains intact — the thin upside may be resolved quickly as price reverts to trend.
Per-dimension breakdown
Quality
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.1 |
| ROA | 3.0 |
| Gross margin | 3.9 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 2.3 |
| FCF quality | 7.4 |
| Moat | 6.5 |
| Piotroski F | 7.8 |
- ▸Strong margins: 25%
- ▸Strong Piotroski F-Score: 7/9
Growth
5.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.7 |
| EPS growth | 10.0 |
- ▸Declining revenue: -3%
Momentum
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.1 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 5.8 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 6.0 |
| erm sentiment | 5.0 |
Insider
7.1/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 9.4 |
| notable moves | 7.0 |
- ▸Negligible insider buying — $405,388 (0.001% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.1 |
| quality rank | 7.3 |
| growth rank | 2.3 |
Technical
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.4 |
| support resistance | 1.7 |
| 52w position | 9.7 |
Risk (lower is worse)
8.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.5 |
| days to cover | 6.3 |
| volatility | 6.8 |
| put call | 9.7 |
| implied vol | 7.7 |
| max pain risk | 7.0 |
| beta | 10.0 |
| debt equity | 9.5 |
Catalyst
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 9.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 3 days
How the verdict was assembled
Engine trigger
Downgraded from BUY WAIT — price $103.36 has reached target $102.99. No upside to wait for.
Engine technical detail
verdict_path:
L3:NEWS_BLOCK|SANITY:WAIT+price>=TPPassed (5)
- MOMENTUM:6.1>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-0.4=NEGATIVE
- EARNINGS_PROXIMITY:3d<=7d
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.44
Upside
-3.7%
Downside
8.3%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
A recent news event triggered an L3 news-block on the verdict path. Trigger: Downgraded from BUY WAIT — price $103.36 has reached target $102.99. No upside to wait for. The 10-dimension scores remain Value at 8.2 (strongest), but ASYMMETRY:-0.4=NEGATIVE also fails — the news block is the proximate trigger, not the sole driver.
The strongest dimensions are Value at 8.2, Risk (lower is worse) at 8.2, and Catalyst at 7.2; the weakest are Technical at 4.3, Peer rank at 5.4, and Growth at 5.8. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.44 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Durable Earnings Beat Streak
Trip ifEPS surprise falls below 0% for 2 consecutive reported quarters.
- P2Compelling Valuation Low PegTripped
Trip ifForward P/E multiple expands above 15x as price rises materially faster than earnings growth.
- P3High Quality Financial Profile
Trip ifNet margin compresses below 15% for 2 consecutive quarters.
- P4Thin Asymmetry Limits New Entry
Trip ifPrice pulls back below $88.00 and upside to the $97.84 target exceeds 12%, creating a more attractive entry.