The Travelers Companies (NYSE:TRV) and Arch Capital Group (NASDAQ:ACGL) are both large-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, earnings, risk and dividends.
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 | 5.81% | 7.20% | 1.68% |
| Arch Capital Group | 15.08% | 5.68% | 1.66% |
Valuation and Earnings
This table compares The Travelers Companies and Arch Capital Group's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| The Travelers Companies | $31.58 billion | 1.09 | $2.62 billion | $9.60 | 14.17 |
| Arch Capital Group | $6.93 billion | 1.97 | $1.64 billion | $2.82 | 11.90 |
The Travelers Companies has higher revenue and earnings than Arch Capital Group. Arch Capital Group is trading at a lower price-to-earnings ratio than The Travelers Companies, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
The Travelers Companies has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, Arch Capital Group has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.
Analyst Recommendations
This is a summary of current ratings and target prices 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 | 3 | 11 | 4 | 0 | 2.06 |
| Arch Capital Group | 0 | 3 | 7 | 0 | 2.70 |
The Travelers Companies presently has a consensus target price of $124.7333, suggesting a potential downside of 8.30%. Arch Capital Group has a consensus target price of $40.90, suggesting a potential upside of 21.91%. Given Arch Capital Group's stronger consensus rating and higher probable upside, analysts clearly believe Arch Capital Group is more favorable than The Travelers Companies.
Insider and Institutional Ownership
81.3% of The Travelers Companies shares are owned by institutional investors. Comparatively, 75.6% of Arch Capital Group shares are owned by institutional investors. 0.8% of The Travelers Companies shares are owned by insiders. Comparatively, 3.4% of Arch Capital Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Summary
The Travelers Companies beats Arch Capital Group on 8 of the 14 factors compared between the two stocks.
