Is Arch Capital Group Ltd. (ACGL) overvalued?
On Equity Rank's model estimate, ACGL trades 21% below its fair value. Arch Capital Group Ltd. (ACGL) last closed at $107.28; the multi-method model fair value is $135.23.
| Price | Model fair value | Price vs model |
|---|---|---|
| $107.28 | $135.23 | 21% below |
What the answer rests on
- 7 of 10 valuation methods put ACGL's value above its price and 3 put it below, so the methods disagree.
- To justify today's price, ACGL's free cash flow would need to grow about -16.8% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 17.6% a year.
- ACGL trades at 9.1 times its last year's earnings, against a median of 13.1 for 75 profitable Insurance companies.
- Over the past year the price sat below the model fair value on 100% of trading days. The gap ranged from 35% below to 18% below the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind ACGL's fair value · What prices assume · Other companies