This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Ratings Changes: Arch Capital, Norfolk

TheStreet.com Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking total return performance.

TheStreet.com's stock-rating model upgraded insurer Arch Capital Group (ACGL) to "buy."

The numbers: First-quarter revenue decreased 13% to $760 million as net income declined 25% to $146 million. Earnings per share fell 19% to $2.24 because of a lower share count. The operating margin dropped from 29% to 19% and the net margin fell from 22% to 19%. The company has an ideal financial position, with over $1.2 billion of cash reserves and just $400 million of debt. We give Arch a financial strength score of 8.5 out of 10.

The stock: Arch is down 10% this year, underperforming the Dow Jones Industrial Average and the S&P 500 Index. The stock trades at an expensive price-to-earnings ratio of 20. The company doesn't pay dividends.

The model upgraded Norfolk Southern (NSC) to "buy." The railroad operator transports freight by train.

The numbers: First-quarter revenue declined 22% to $1.9 billion as net income dropped 39% to $177 million. Earnings per share fell 38% to 47 cents, helped by a lower share count. The operating margin decreased from 24% to 20% and the net margin fell from 12% to 9%. A quick ratio of 0.9 indicates a less-than-ideal liquidity position. But Norfolk Southern has more than doubled its cash reserves to $884 million from the year-ago quarter. And a debt-to-equity ratio of 0.7 demonstrates reasonable leverage.

The stock: Norfolk Southern has climbed 19% this year, outperforming the Dow and S&P 500. The stock trades at a cheap price-to-earnings ratio of 10 and offers an attractive 3.1% dividend yield.

Stock quotes in this article: ACGL, NSC, OFG 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,424.85 +162.29 1.00%
S&P 500 1,862.31 +19.33 1.05%
NASDAQ 4,086.2250 +52.0640 1.29%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs