ACGL
Arch Capital Group Ltd.
$100.82
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 59.6% below fair value
Bear
$249.30
+147.3%
ROTCE 15.5% → 4.00x TBV
Fair
$249.30
+147.3%
ROTCE 20.7% → 4.00x TBV
Bull
$249.30
+147.3%
ROTCE 23.8% → 4.00x TBV
Adjust Assumptions
20.7%
6.0%
Key Value Driver
ROTCE (20.7%) vs. cost of equity (6.0%)
Implied Market Multiple
1.62x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (34 analysts)
$111.83
Divergence from AlphaVal
123%
Summary
With ROTCE of 20.7% vs. 6.0% cost of equity, fair P/TBV is 4.00x on $62.32 tangible book, implying $249.30 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $111.83 (from 34 analysts). Our estimate is 123% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly