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Arch Capital Group Ltd (NAS:ACGL)
Intrinsic Value (DCF Projected)
$113.39 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value (DCF), or Discounted Earnings (DCE) Intrinsic Value (DE) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Discounted 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 DCF projected intrinsic value is $113.39. The stock price of Arch Capital Group Ltd is $55.68. Therefore, Arch Capital Group Ltd's Price to Intrinsic Value (DCF Projected) Ratio of today is 0.5.

ACGL' s 10-Year Price to Intrinsic Value (DCF Projected) Range
Min: 0.17   Max: 1.2
Current: 0.49

0.17
1.2

During the past 13 years, the highest Price to Intrinsic Value (DCF Projected) Ratio of Arch Capital Group Ltd was 1.20. The lowest was 0.17. And the median was 0.35.

ACGL's Price to Intrinsic Value (DCF Projected) is ranked higher than
84% of the 206 Companies
in the Global Insurance - Property & Casualty industry.

( Industry Median: 0.90 vs. ACGL: 0.49 )

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value (DCF), or Discounted Earnings (DCE) Intrinsic Value (DE) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Discounted 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

201203201206201209201212201303201306201309201312201403201406
total_freecashflow 138249331185202179235217193250
200909200912201003201006201009201012201103201106201109201112
total_freecashflow 286180183199265143216218307106
200809200812200903200906
total_freecashflow 380163287220

Add all the Free Cash Flow together and divide 6 will get Arch Capital Group Ltd's FCF(6 year avg) = $888.94.

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

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Jun14)*0.8)/Shares Outstanding
=(11.8545928257*888.935833333+6229.399*0.8)/136.890
=113.39

* 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 DCF Projected Intrinsic Value Ratio for today is calculated as

Price to DCF Projected Intrinsic Value=Share Price/DCF Projected Intrinsic Value
=55.68/113.386599111
=0.49

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


Related Terms

Intrinsic Value (DE), Intrinsic Value (DCF), 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
iv_dcf_share 37.0846.9788.38113.8790.2592.80101.39115.34114.57111.11

Arch Capital Group Ltd Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
iv_dcf_share 114.04113.96115.91114.57115.79112.96111.36111.11110.69113.39
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