Yahoo Finance The total return for Arch Capital Group (NASDAQ:ACGL) investors has risen faster than earnings growth over the last five years
When you buy a stock there is always a possibility that it could drop 100%. But on a lighter note, a good company can see its share price rise well over 100%. One great example is Arch Capital Group Ltd. (NASDAQ:ACGL) which saw its share price drive 113% higher over five years. Unfortunately, though, the stock has dropped 3.4% over a week.
Although Arch Capital Group has shed US$804m from its market cap this week, let's take a look at its longer term fundamental trends and see if they've driven returns.
Check out our latest analysis for Arch Capital Group
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).
During five years of share price growth, Arch Capital Group achieved compound earnings per share (EPS) growth of 25% per year. This EPS growth is higher than the 16% average annual increase in the share price. So one could conclude that the broader market has become more cautious towards the stock.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into Arch Capital Group's key metrics by checking this interactive graph of Arch Capital Group's earnings, revenue and cash flow.
A Different Perspective
It's good to see that Arch Capital Group has rewarded shareholders with a total shareholder return of 29% in the last twelve months. That's better than the annualised return of 16% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Arch Capital Group better, we need to consider many other factors. Case in point: We've spotted 1 warning sign for Arch Capital Group you should be aware of.
Of course Arch Capital Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
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