Alleghany Corporation (NYSE: Y) and Arch Capital Group (NASDAQ:ACGL) are both mid-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, valuation, profitability, earnings, dividends, analyst recommendations and institutional ownership.

Analyst Ratings

This is a breakdown of current recommendations for Alleghany Corporation and Arch Capital Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alleghany Corporation 0 1 1 0 2.50
Arch Capital Group 0 6 4 0 2.40

Alleghany Corporation presently has a consensus target price of $625.00, indicating a potential upside of 8.44%. Arch Capital Group has a consensus target price of $99.67, indicating a potential upside of 4.14%. Given Alleghany Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Alleghany Corporation is more favorable than Arch Capital Group.

Risk & Volatility

Alleghany Corporation has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500. Comparatively, Arch Capital Group has a beta of 0.7, suggesting that its stock price is 30% less volatile than the S&P 500.

Insider & Institutional Ownership

81.0% of Alleghany Corporation shares are held by institutional investors. Comparatively, 76.4% of Arch Capital Group shares are held by institutional investors. 4.0% of Alleghany Corporation shares are held by insiders. Comparatively, 6.6% of Arch Capital Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Alleghany Corporation 0.10% -0.14% -0.05%
Arch Capital Group 9.44% 5.57% 1.44%

Earnings & Valuation

This table compares Alleghany Corporation and Arch Capital Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Alleghany Corporation $6.13 billion 1.45 $456.92 million ($0.13) -4,433.62
Arch Capital Group $4.39 billion 2.85 $692.73 million $3.10 30.87

Arch Capital Group has higher revenue, but lower earnings than Alleghany Corporation. Alleghany Corporation 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.

Summary

Arch Capital Group beats Alleghany Corporation on 8 of the 13 factors compared between the two stocks.

About Alleghany Corporation

Alleghany Corporation is an insurance holding company. The Company, through its subsidiary Alleghany Insurance Holdings LLC (AIHL) and its subsidiaries, is engaged in the property and casualty insurance business. AIHL’s insurance operations are conducted by its subsidiaries RSUI Group, Inc. (RSUI), CapSpecialty, Inc. (CapSpecialty) and Pacific Compensation Corporation (PacificComp). Its segments include reinsurance and insurance. Its reinsurance segment consists of property and casualty reinsurance operations conducted by Transatlantic Holdings, Inc. reinsurance operating subsidiaries. Its insurance segment consists of property and casualty insurance operations conducted by AIHL through its insurance operating subsidiaries RSUI, CapSpecialty and PacificComp. AIHL Re LLC, which is a captive reinsurance company, provides reinsurance to its insurance operating subsidiaries and affiliates.

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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