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Arch Capital Group Ltd (NAS:ACGL)
Intrinsic Value: Projected FCF
$156.53 (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 $156.53. The stock price of Arch Capital Group Ltd is $83.09. 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: 0.53

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 0.38.

ACGL's Price to Intrinsic Value: Projected FCF is ranked higher than
66% of the 29 Companies
in the Global Insurance - Reinsurance industry.

( Industry Median: 0.85 vs. ACGL: 0.53 )

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

201406201409201412201503201506201509201512201603201606201609
total_freecashflow 25034223282297418185319214493
201112201203201206201209201212201303201306201309201312201403
total_freecashflow 106138249331185202179235217193
201012201103201106201109
total_freecashflow 143216218307

Add all the Free Cash Flow together and divide 6 will get Arch Capital Group Ltd's FCF(6 year avg) = $958.59.

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(Sep16)*0.8)/Shares Outstanding
=(14.2639575377*958.586+7352.322*0.8)/124.932
=156.53

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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
=83.09/156.525850865
=0.53

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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 local exchange's 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

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
Projected FCF 114.45112.81115.44122.43122.89124.86119.67129.85141.05156.53
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