W. R. Berkley (NYSE: WRB) and Arch Capital Group (NASDAQ:ACGL) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.
Earnings and Valuation
This table compares W. R. Berkley and Arch Capital Group’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|W. R. Berkley||$7.68 billion||1.20||$549.09 million||$2.46||30.79|
|Arch Capital Group||$5.63 billion||1.97||$619.27 million||$3.21||25.37|
Risk and Volatility
W. R. Berkley has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, Arch Capital Group has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500.
This is a summary of current ratings for W. R. Berkley and Arch Capital Group, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|W. R. Berkley||2||6||0||0||1.75|
|Arch Capital Group||0||2||4||0||2.67|
W. R. Berkley currently has a consensus target price of $69.14, suggesting a potential downside of 8.71%. Arch Capital Group has a consensus target price of $103.50, suggesting a potential upside of 27.07%. Given Arch Capital Group’s stronger consensus rating and higher possible upside, analysts clearly believe Arch Capital Group is more favorable than W. R. Berkley.
Insider and Institutional Ownership
71.9% of W. R. Berkley shares are held by institutional investors. Comparatively, 81.0% of Arch Capital Group shares are held by institutional investors. 22.2% of W. R. Berkley shares are held by company insiders. Comparatively, 5.1% of Arch Capital Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
This table compares W. R. Berkley and Arch Capital Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|W. R. Berkley||7.68%||6.53%||1.46%|
|Arch Capital Group||9.41%||6.04%||1.65%|
W. R. Berkley pays an annual dividend of $0.56 per share and has a dividend yield of 0.7%. Arch Capital Group does not pay a dividend. W. R. Berkley pays out 22.8% of its earnings in the form of a dividend. W. R. Berkley has increased its dividend for 8 consecutive years.
Arch Capital Group beats W. R. Berkley on 10 of the 17 factors compared between the two stocks.
About W. R. Berkley
W. R. Berkley Corporation, an insurance holding company, operates as a commercial lines writer in the United States and internationally. It operates through two segments, Insurance and Reinsurance. The Insurance segment underwrites commercial insurance business, including premises operations, commercial automobile, property, products liability, and professional liability lines. It also provides workers' compensation, property casualty, general liability, and excess and umbrella coverage insurance products, as well as coverages for technology, ambulatory surgery centers, chiropractors, and concierge physicians; accident and health insurance and reinsurance products; insurance for commercial risks; pollution liability and protective coverages to contractors and owners; and liquor liability and inland marine coverage for small to medium-sized insureds. In addition, this segment offers aviation insurance products; directors and officers, and surety risk products, as well as products for life sciences and travel industries; coverage for excess liability, construction wrap-ups, and completed operations; cyber risk solutions; casualty, group life, and crime-related insurance products; personal lines insurance solutions, including home, condo/co-op, and collectibles; automobile, law enforcement, public officials and educator's legal, and employment practices liability, as well as incidental medical insurance products; and at-risk and alternative risk insurance program management services. The Reinsurance segment provides other insurance companies and self-insureds with assistance in managing their net risk through reinsurance on a portfolio basis through treaty reinsurance or on an individual basis through facultative reinsurance. W. R. Berkley Corporation was founded in 1967 and is based in Greenwich, Connecticut.
About Arch Capital Group
Arch Capital Group Ltd., together with its subsidiaries, provides property, casualty, and mortgage insurance and reinsurance products worldwide. The company's Insurance segment offers primary and excess casualty coverages; loss sensitive primary casualty insurance programs; collateral protection, debt cancellation, and service contract reimbursement products; directors' and officers' liability, errors and omissions liability, employment practices and fiduciary liability, crime, professional indemnity, and other financial related coverages; medical professional and general liability insurance coverages; and workers' compensation and umbrella liability, as well as commercial automobile and inland marine products. It also provides property, energy, marine, and aviation insurance; travel insurance; accident, disability, and medical plan insurance coverages; captive insurance programs; employers' liability insurance coverages; and contract and commercial surety coverages. This segment markets its products through a group of licensed independent retail and wholesale brokers. Its Reinsurance segment provides reinsurance for third party liability and workers' compensation exposures; marine and aviation reinsurance; surety, accident and health, workers' compensation catastrophe, agriculture, trade credit, and political risk products; reinsurance protection for catastrophic losses and commercial property risks; life reinsurance; casualty clash; and risk management solutions. This segment markets its reinsurance products through brokers, and directly to ceding companies. The company's Mortgage segment offers private mortgage insurance covering one-to-four family residential mortgages; mortgage insurance to cover previously originated residential loans; quota share reinsurance; and risk-sharing products. This segment sells its products through direct basis and through brokers to mortgage originators. The company was founded in 1995 and is based in Pembroke, Bermuda.
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