Stewart Information Services (NYSE:STC) vs. Arch Capital Group (NASDAQ:ACGL) Critical Analysis

Arch Capital Group (NASDAQ:ACGL) and Stewart Information Services (NYSE:STC) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their profitability, analyst recommendations, dividends, earnings, risk, valuation and institutional ownership.

Profitability

This table compares Arch Capital Group and Stewart Information Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arch Capital Group	20.96%	16.38%	4.62%
Stewart Information Services	3.65%	8.57%	4.45%

Risk and Volatility

Arch Capital Group has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500. Comparatively, Stewart Information Services has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Arch Capital Group and Stewart Information Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arch Capital Group	1	8	8	0	2.41
Stewart Information Services	0	1	2	0	2.67

Arch Capital Group currently has a consensus target price of $106.00, suggesting a potential upside of 10.19%. Stewart Information Services has a consensus target price of $81.50, suggesting a potential upside of 13.92%. Given Stewart Information Services’ stronger consensus rating and higher probable upside, analysts plainly believe Stewart Information Services is more favorable than Arch Capital Group.

Insider & Institutional Ownership

89.1% of Arch Capital Group shares are owned by institutional investors. Comparatively, 96.9% of Stewart Information Services shares are owned by institutional investors. 4.2% of Arch Capital Group shares are owned by insiders. Comparatively, 1.5% of Stewart Information Services shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Arch Capital Group and Stewart Information Services”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arch Capital Group	$17.44 billion	2.00	$4.31 billion	$10.69	9.00
Stewart Information Services	$2.49 billion	0.80	$73.31 million	$3.59	19.93

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

Summary

Arch Capital Group beats Stewart Information Services on 9 of the 14 factors compared between the two stocks.

About Arch Capital Group

Arch Capital Group Ltd., together with its subsidiaries, provides insurance, reinsurance, and mortgage insurance products worldwide. The company's Insurance segment offers primary and excess casualty coverages; loss sensitive primary casualty insurance programs; directors' and officers' liability, errors and omissions liability, employment practices and fiduciary liability, crime, professional indemnity, and other financial related coverages; medical professional and general liability insurance coverages; and workers' compensation and umbrella liability, as well as commercial automobile and inland marine products. It also provides property, energy, marine, and aviation insurance; travel insurance; accident, disability, and medical plan insurance coverages; captive insurance programs; employer's liability; contract and commercial surety coverages; and collateral protection, debt cancellation, and service contract reimbursement products. This segment markets its products through a group of licensed independent retail and wholesale brokers. Its Reinsurance segment provides casualty reinsurance for third party liability exposures; marine and aviation; motor reinsurance, whole account multi-line treaties, cyber, trade credit, surety, accident and health, workers' compensation catastrophe, agriculture, trade credit, and political risk products; reinsurance protection for catastrophic losses, and personal lines and commercial property exposures; life reinsurance; casualty clash; and risk management solutions. This segment markets its reinsurance products through brokers. The company's Mortgage segment offers direct mortgage insurance and mortgage reinsurance. The company was founded in 1995 and is based in Pembroke, Bermuda.

About Stewart Information Services

Stewart Information Services Corporation, through its subsidiaries, provides title insurance and real estate transaction related services in the United States and internationally. The company involves in searching, examining, closing, and insuring the condition of the title to real property. It also offers home and personal insurance services; services for tax-deferred exchanges; and digital customer engagement platform services. It also provides appraisal management, online notarization and closing, credit and real estate information, and search and valuation services. The company serves homebuyers and sellers, residential and commercial real estate professionals, mortgage lenders and servicers, title agencies and real estate attorneys, and home builders through direct operations, network of independent agencies, and other businesses. The company was founded in 1893 and is headquartered in Houston, Texas.