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Arch Capital Group Ltd (NAS:ACGL)
Intrinsic Value: Projected FCF
$129.85 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, Arch Capital Group Ltd's projected FCF intrinsic value is $129.85. The stock price of Arch Capital Group Ltd is $71.56. Therefore, Arch Capital Group Ltd's Price to Intrinsic Value: Projected FCF Ratio of today is 0.5.

ACGL' s Price to Intrinsic Value: Projected FCF Range Over the Past 10 Years
Min: 0.17   Max: 1.2
Current: 0.54

0.17
1.2

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of Arch Capital Group Ltd was 1.20. The lowest was 0.17. And the median was 0.37.

ACGL's Price to Intrinsic Value: Projected FCF is ranked higher than
65% of the 26 Companies
in the Global Insurance - Reinsurance industry.

( Industry Median: 0.70 vs. ACGL: 0.54 )

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding


Here Arch Capital Group Ltd's FCF(6 year avg) is calculate as

Arch Capital Group Ltd Quarterly Data

201312201403201406201409201412201503201506201509201512201603
total_freecashflow 21719325034223282260455185319
201106201109201112201203201206201209201212201303201306201309
total_freecashflow 218307106138249331185202179235
201006201009201012201103
total_freecashflow 199265143216

Add all the Free Cash Flow together and divide 6 will get Arch Capital Group Ltd's FCF(6 year avg) = $918.19.

Arch Capital Group Ltd's Intrinsic Value: Projected FCF for today is calculated as

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Mar16)*0.8)/Shares Outstanding
=(12.0181811285*918.193833333+6413.587*0.8)/124.496
=129.85

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

Arch Capital Group Ltd's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

Price to Intrinsic Value: Projected FCF=Share Price/Intrinsic Value: Projected FCF
=71.56/129.850673114
=0.55

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Related Terms

Intrinsic Value: DCF (Earnings Based), Intrinsic Value: DCF (FCF Based), Free Cash Flow


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Arch Capital Group Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
Projected FCF 88.86109.3787.1589.8296.79114.11115.21111.89115.44119.67

Arch Capital Group Ltd Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
Projected FCF 111.89111.22114.45112.81115.44122.43122.30124.86119.67129.85
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