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URL:  http://boards.fool.com/acgl-a-case-study-on-security-analysis-part5-21268285.aspx

Subject:  ACGL : A case study on security analysis PART5 Date:  9/6/2004  5:23 AM
Author:  DCFNewbie Number:  32980 of 46904

Hi everyone,

This is the 5th and FINAL section (Yey!!!) of a 5 segment piece on Arch Capital Group Holding Ltd. (ACGL), in this case devoted to price targets and exit conditions.

Updated values and quick summary:

Framework structure:

1) Valuation

2) Operational Reality

3) Company History/Background

4) Operational Growth/Risk

5) Establishing Price Target and/or exit conditions


1) Valuation

Trailing P/E = 7.59
Trailing FCF/EV = 1.69

Analysts Growth Est. (5yr) = 20%
Past Growth (5yr) = 8.9%
Industry predicted growth (5yr) = 12.4%

Pondered growth average (20+8.9+10.95)/3 = 13.77% <- This one is the one I'll be using

We will try and justify how reasonable this growth is in section 4 - Operational growth and risk

FCF/EV/G = 0.12

2) Operational Reality

I will subdivide this section into:

(1)- Industry
(2)- Company operations
(2.1)- Small description
(2.2)- Management
(2.3)- Operational metrics
(2.4)- Company's equity makeup and balance sheet

This section's content can be found on a previous post:

http://boards.fool.com/Message.asp?mid=21234279

3) Company History/Background

This section's content can be found on a previous post:

http://boards.fool.com/Message.asp