Arch Capital Group Ltd. Depositary Shares Each Representing 1/1000th Interest in a Share of 5.45% Non-Cumulative Preferred Shares Series F (ACGLO)

FairStock Score: 90/100 — HIGH CONVICTION

Key Financials

Strengths

• Solid return on equity of 19.5% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.12, providing financial flexibility
• Attractive 6.7% dividend yield providing steady income returns
• FairStock composite score of 90/100 places it in the top tier across value, quality, and momentum factors

Concerns

• Altman Z-Score of 0.7 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Arch Capital Group Ltd. Depositary Shares Each Representing 1/1000th Interest in a Share of 5.45% Non-Cumulative Preferred Shares Series F is a mid-cap financial services company valued at $11.9 billion. The business generates $19.9 billion in annual revenue with a 6.2% net margin. From a quality standpoint, Arch shows distressed Altman Z-Score of 0.7 warrants caution and adequate 20% ROE. On valuation, the stock is deeply undervalued on a P/E basis at 4.3x, with offers a 76% margin of safety vs Graham Number of $84. Growth dynamics show revenue growing at 5.6% and profit growth of 32.4%. The 6.7% dividend yield adds an income component for patient holders. Our composite FairStock Score of 90/100 reflects strong fundamentals overall. This combination of reasonable valuation, solid returns, and conservative leverage makes it worth a closer look for value-oriented portfolios.

Bull Case

The market underappreciates Arch's consistent 20% ROE at just 4x earnings—a re-rating toward sector peers could unlock 30-50% upside. Operational leverage in the business model means incremental revenue growth could disproportionately boost bottom-line profitability.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the financial services space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer