Arch Capital Return On Equity vs. Profit Margin
| ACGL Stock | USD 95.06 1.88 1.94% |
Return On Equity | First Reported 2010-12-31 | Previous Quarter 0.20710855 | Current Value 0.22 | Quarterly Volatility 0.06105316 |
| Current Value | Last Year | Change From Last Year | 10 Year Trend | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Gross Profit Margin | 0.97 | 0.9865 |
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| Net Profit Margin | 0.26 | 0.2472 |
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| Operating Profit Margin | 0.0109 | 0.0115 |
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| Pretax Profit Margin | 0.27 | 0.2565 |
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| Return On Assets | 0.0639 | 0.0608 |
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| Return On Equity | 0.22 | 0.2071 |
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For Arch Capital profitability analysis, we use financial ratios and fundamental drivers that measure the ability of Arch Capital to generate income relative to revenue, assets, operating costs, and current equity. These fundamental indicators attest to how well Arch Capital Group utilizes its assets to generate profit and value for its shareholders. The profitability module also shows relationships between Arch Capital's most relevant fundamental drivers. It provides multiple suggestions of what could affect the performance of Arch Capital Group over time as well as its relative position and ranking within its peers.
Arch |
Is Property & Casualty Insurance space expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Arch Capital. If investors know Arch will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Arch Capital listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth (0.60) | Earnings Share 11.19 | Revenue Per Share | Quarterly Revenue Growth 0.144 | Return On Assets |
The market value of Arch Capital Group is measured differently than its book value, which is the value of Arch that is recorded on the company's balance sheet. Investors also form their own opinion of Arch Capital's value that differs from its market value or its book value, called intrinsic value, which is Arch Capital's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Arch Capital's market value can be influenced by many factors that don't directly affect Arch Capital's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Arch Capital's value and its price as these two are different measures arrived at by different means. Investors typically determine if Arch Capital is a good investment by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Arch Capital's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.
Arch Capital Group Profit Margin vs. Return On Equity Fundamental Analysis
Comparative valuation techniques use various fundamental indicators to help in determining Arch Capital's current stock value. Our valuation model uses many indicators to compare Arch Capital value to that of its competitors to determine the firm's financial worth. Arch Capital Group is rated fourth in return on equity category among its peers. It is rated third in profit margin category among its peers fabricating about 1.12 of Profit Margin per Return On Equity. At this time, Arch Capital's Return On Equity is quite stable compared to the past year. Comparative valuation analysis is a catch-all technique that is used if you cannot value Arch Capital by discounting back its dividends or cash flows. It compares the stock's price multiples to nearest competition to determine if the stock is relatively undervalued or overvalued.Arch Profit Margin vs. Return On Equity
Return on Equity or ROE tells company stockholders how effectually their money is being utilized or reinvested. It is a useful ratio when analyzing company profitability or the management effectiveness given the capital invested by the shareholders. ROE shows how efficiently a company utilizes investments to generate income.
Arch Capital |
| = | 0.22 |
For most industries, Return on Equity between 10% and 30% are considered desirable to provide dividends to owners and have funds for the future growth of the company. Investors should be very careful using ROE as the only efficiency indicator because ROE can be high if a company is heavily leveraged.
Profit Margin measures overall efficiency of a company and shows its ability to withstand competition as well as defend against adverse conditions such as rising costs, falling prices, decline in sales or management distress. Profit margin tells investors how well the company executes on its overall pricing strategies as well as how effective the company in controlling its costs.
Arch Capital |
| = | 0.25 % |
In a nutshell, Profit Margin indicator shows the amount of money the company makes from total sales or revenue. It can provide a good insight into companies in the same sector, as well as help to identify trends of a company from year to year.
Arch Profit Margin Comparison
Arch Capital is currently under evaluation in profit margin category among its peers.
Arch Capital Profitability Projections
The most important aspect of a successful company is its ability to generate a profit. For investors in Arch Capital, profitability is also one of the essential criteria for including it into their portfolios because, without profit, Arch Capital will eventually generate negative long term returns. The profitability progress is the general direction of Arch Capital's change in net profit over the period of time. It can combine multiple indicators of Arch Capital, where stable trends show no significant progress. An accelerating trend is seen as positive, while a decreasing one is unfavorable. A rising trend means that profits are rising, and operational efficiency may be rising as well. A decreasing trend is a sign of poor performance and may indicate upcoming losses.
| Last Reported | Projected for Next Year | ||
| Accumulated Other Comprehensive Income | -608.4 M | -578 M | |
| Operating Income | 200 M | 190 M | |
| Net Income | 4.3 B | 4.5 B | |
| Income Tax Expense | 362 M | 380.1 M | |
| Income Before Tax | 4.5 B | 4.7 B | |
| Total Other Income Expense Net | 4.3 B | 4.5 B | |
| Net Income Applicable To Common Shares | 1.7 B | 1.7 B | |
| Net Income From Continuing Ops | 4.3 B | 4.5 B | |
| Interest Income | 20.2 M | 26.8 M | |
| Net Interest Income | -141 M | -148.1 M | |
| Change To Netincome | 1 B | 1.1 B | |
| Net Income Per Share | 11.58 | 12.15 | |
| Income Quality | 1.55 | 1.47 | |
| Net Income Per E B T | 0.96 | 1.08 |
Arch Profitability Driver Comparison
Profitability drivers are factors that can directly affect your investment outlook on Arch Capital. Investors often realize that things won't turn out the way they predict. There are maybe way too many unforeseen events and contingencies during the holding period of Arch Capital position where the market behavior may be hard to predict, tax policy changes, gold or oil price hikes, calamities change, and many others. The question is, are you prepared for these unexpected events? Although some of these situations are obviously beyond your control, you can still follow the important profit indicators to know where you should focus on when things like this occur. Below are some of the Arch Capital's important profitability drivers and their relationship over time.
Use Arch Capital in pair-trading
One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Arch Capital position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Arch Capital will appreciate offsetting losses from the drop in the long position's value.Arch Capital Pair Trading
Arch Capital Group Pair Trading Analysis
The ability to find closely correlated positions to Arch Capital could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Arch Capital when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Arch Capital - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Arch Capital Group to buy it.
The correlation of Arch Capital is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Arch Capital moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Arch Capital Group moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Arch Capital can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.Use Investing Themes to Complement your Arch Capital position
In addition to having Arch Capital in your portfolios, you can quickly add positions using our predefined set of ideas and optimize them against your very unique investing style. A single investing idea is a collection of funds, stocks, ETFs, or cryptocurrencies that are programmatically selected from a pull of investment themes. After you determine your investment opportunity, you can then find an optimal portfolio that will maximize potential returns on the chosen idea or minimize its exposure to market volatility.Did You Try This Idea?
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To fully project Arch Capital's future profitability, investors should examine all historical financial statements. These statements provide investors with a comprehensive snapshot of the financial position of Arch Capital Group at a specified time, usually calculated after every quarter, six months, or one year. Three primary documents fall into the category of financial statements. These documents include Arch Capital's income statement, its balance sheet, and the statement of cash flows.