Markel Corporation (NYSE: MKL) and Arch Capital Group (NASDAQ:ACGL) are both large-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitabiliy, analyst recommendations, dividends, valuation, earnings and risk.

Earnings & Valuation

This table compares Markel Corporation and Arch Capital Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Markel Corporation $5.65 billion 2.42 $899.48 million $24.02 40.90
Arch Capital Group $4.70 billion 2.72 $1.07 billion $5.87 16.22

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

Volatility and Risk

Markel Corporation has a beta of 1.01, meaning that its stock price is 1% more volatile than the S&P 500. Comparatively, Arch Capital Group has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500.

Institutional and Insider Ownership

75.7% of Markel Corporation shares are held by institutional investors. Comparatively, 73.5% of Arch Capital Group shares are held by institutional investors. 2.5% of Markel Corporation shares are held by company insiders. Comparatively, 6.6% of Arch Capital Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Markel Corporation and Arch Capital Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Markel Corporation 6.47% 4.11% 1.33%
Arch Capital Group 16.92% 8.85% 2.38%

Analyst Ratings

This is a summary of recent ratings for Markel Corporation and Arch Capital Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Markel Corporation 0 2 1 0 2.33
Arch Capital Group 0 7 4 0 2.36

Markel Corporation currently has a consensus target price of $1,000.00, suggesting a potential upside of 1.78%. Arch Capital Group has a consensus target price of $91.67, suggesting a potential downside of 3.74%. Given Markel Corporation’s higher possible upside, equities research analysts clearly believe Markel Corporation is more favorable than Arch Capital Group.

Summary

Arch Capital Group beats Markel Corporation on 8 of the 14 factors compared between the two stocks.

About Markel Corporation

Markel Corporation is a financial holding company serving a range of markets. The Company’s principal business markets and underwrites specialty insurance products. It monitors and reports its ongoing underwriting operations in three segments: U.S. Insurance, International Insurance and Reinsurance. The Company, through its subsidiary Markel Ventures, Inc. (Markel Ventures), owns interests in various industrial and service businesses that operate outside of the specialty insurance marketplace. The U.S. Insurance segment includes all direct business and facultative placements written by its insurance subsidiaries domiciled in the United States. The International Insurance segment includes all direct business and facultative placements written by its insurance subsidiaries domiciled outside of the United States, including its syndicate at Lloyd’s of London (Lloyd’s). The Reinsurance segment includes all treaty reinsurance written across the Company.

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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