Head-To-Head Review: The Travelers Companies (TRV) & Arch Capital Group (ACGL)

The Travelers Companies (NYSE: TRV) and Arch Capital Group (NASDAQ:ACGL) are both large-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, earnings, valuation, risk, profitability, institutional ownership and analyst recommendations.

Profitability

This table compares The Travelers Companies and Arch Capital Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The Travelers Companies 8.56% 9.87% 2.28%
Arch Capital Group 9.44% 5.70% 1.47%

Dividends

The Travelers Companies pays an annual dividend of $2.88 per share and has a dividend yield of 2.2%. Arch Capital Group does not pay a dividend. The Travelers Companies pays out 33.4% of its earnings in the form of a dividend. Arch Capital Group has raised its dividend for 8 consecutive years.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for The Travelers Companies and Arch Capital Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Travelers Companies 4 6 7 0 2.18
Arch Capital Group 0 6 3 0 2.33

The Travelers Companies presently has a consensus price target of $127.56, suggesting a potential downside of 3.32%. Arch Capital Group has a consensus price target of $98.00, suggesting a potential downside of 2.59%. Given Arch Capital Group’s stronger consensus rating and higher probable upside, analysts plainly believe Arch Capital Group is more favorable than The Travelers Companies.

Earnings and Valuation

This table compares The Travelers Companies and Arch Capital Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Travelers Companies $28.15 billion 1.29 $4.86 billion $8.61 15.32
Arch Capital Group $4.91 billion 2.76 $1.14 billion $3.10 32.45

The Travelers Companies has higher revenue and earnings than Arch Capital Group. The Travelers Companies is trading at a lower price-to-earnings ratio than Arch Capital Group, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

77.3% of The Travelers Companies shares are held by institutional investors. Comparatively, 76.9% of Arch Capital Group shares are held by institutional investors. 0.8% of The Travelers Companies shares are held by insiders. Comparatively, 6.6% of Arch Capital Group shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility & Risk

The Travelers Companies has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500. Comparatively, Arch Capital Group has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500.

Summary

The Travelers Companies beats Arch Capital Group on 9 of the 17 factors compared between the two stocks.

About The Travelers Companies

The Travelers Companies, Inc. is a holding company. The Company’s segments include Business and International Insurance; Bond & Specialty Insurance, and Personal Insurance. Through its subsidiaries, it provides commercial and personal property and casualty insurance products and services. The Business and International Insurance segment offers property and casualty insurance and insurance related services to its clients, in the United States and in Canada, as well as in the United Kingdom, the Republic of Ireland, Brazil and throughout other parts of the world. The Bond & Specialty Insurance segment provides surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to a range of primarily domestic customers, utilizing various degrees of financially-based underwriting approaches. The Personal Insurance segment writes a range of property and casualty insurance covering individuals’ personal risks.

About Arch Capital Group

Arch Capital Group Ltd. provides insurance, reinsurance and mortgage insurance. The Company provides a range of property, casualty and mortgage insurance and reinsurance lines. The Company operates in five segments: insurance, reinsurance, mortgage, other and corporate. The insurance segment’s product lines include construction and national accounts; excess and surplus casualty; lenders products; professional lines; programs; property, energy, marine and aviation; travel, accident and health, and other. The reinsurance segment’s product lines include casualty; marine and aviation; other specialty; property catastrophe; property excluding property catastrophe, and other. The mortgage segment includes the results of Arch Mortgage Insurance Company and Arch Mortgage Insurance Designated Activity Company, which are providers of mortgage insurance products and services to the United States and European markets. The other segment includes the results of Watford Holdings Ltd.

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