Will Arch Capital (ACGL) Beat Estimates Again in Its Next Earnings Report?

Have you been looking for a stock that could be well-positioned to continue its earnings streak in its upcoming report? Consider Arch Capital Group (ACGL), which belongs to the Zacks Insurance – Property and Casualty industry.

Looking at the last two reports, the property and casualty insurer has had a strong streak of beating earnings estimates. The company has beaten estimates by 23.64%, on average, over the last two quarters.

For the last quarter, Arch Capital expected earnings of $2.06 per share but instead reported $2.45 per share, delivering a surprise of 18.93%. For the previous quarter, the consensus estimate was $1.94 per share when it actually came in at $2.49 per share, delivering a surprise of 28.35%.

Given this earnings history, Arch Capital’s latest estimates are moving higher. In fact, the company’s Zacks Earnings ESP (Expected Surprise Prediction) is positive, which is a great sign of an earnings beat, especially when you combine this metric with its strong Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better deliver a positive surprise almost 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat consensus estimates could be as many as seven.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a revision of the Zacks Consensus definition that is related to revision. The idea is that analysts revising their estimates just before an earnings release have the latest information, which could potentially be more accurate than what they and other contributors to the consensus had previously predicted.

Arch Capital currently has an Earnings ESP of +2.64%, suggesting that analysts have become bullish on its near-term earnings potential. When we combine this positive Earnings ESP with the stock’s Zacks Rank #3 (Hold), it shows that another beat is likely just around the corner. The company’s next earnings report is expected to be released on July 30, 2024.

In the case of the Earnings ESP indicator, it is important to remember that a negative value reduces its predictive power; however, a negative Earnings ESP value does not mean that profits have not been achieved.

Many companies end up beating consensus EPS estimates, but that may not be the only basis for their stock growth. On the other hand, some stocks can maintain their position even if they end up missing consensus estimates.

For this reason, it is very important to check a company’s Earnings ESP before its quarterly release to increase your chances of success. Make sure you use our Earnings ESP Filter to discover the best stocks to buy or sell before they are released.

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