Yahoo Finance Arch Capital Group Ltd. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
A week ago, Arch Capital Group Ltd. (NASDAQ:ACGL) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 6.5% to hit US$4.1b. Arch Capital Group also reported a statutory profit of US$2.92, which was an impressive 37% above what the analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Arch Capital Group
Taking into account the latest results, the current consensus from Arch Capital Group's nine analysts is for revenues of US$15.9b in 2024. This would reflect a notable 10% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to crater 26% to US$9.48 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$15.3b and earnings per share (EPS) of US$8.31 in 2024. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a substantial gain in earnings per share in particular.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$107, suggesting that the forecast performance does not have a long term impact on the company's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Arch Capital Group at US$116 per share, while the most bearish prices it at US$94.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 14% growth on an annualised basis. That is in line with its 16% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 5.9% annually. So it's pretty clear that Arch Capital Group is forecast to grow substantially faster than its industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Arch Capital Group following these results. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Arch Capital Group going out to 2026, and you can see them free on our platform here..
Even so, be aware that Arch Capital Group is showing 2 warning signs in our investment analysis , and 1 of those is potentially serious...
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
