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Essent Group (ESNT)
NYSE:ESNT
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Essent Group
(NYSE:ESNT)
75Outperform
Essent Group (ESNT) vs. S&P 500 (SPY)
Market Cap
$5.77B
Dividend Yield1.99%
Average Volume (3M)793.23K
Price to Earnings (P/E)8.2
Beta (1Y)0.78
Revenue Growth11.88%
EPS Growth5.54%
CountryUS
Employees625
SectorFinancial
Sector Strength77
IndustryInsurance
Share Statistics
EPS (TTM)6.84
Shares Outstanding103,835,365
10 Day Avg. Volume771,489
30 Day Avg. Volume793,225
Financial Highlights & Ratios
PEG Ratio1.49
Price to Book (P/B)N/A
Price to Sales (P/S)4.64
Price to Cash Flow (P/CF)6.40
P/FCF Ratio6.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$66.50Price Target Upside21.88% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Essent Group Business Overview & Revenue Model
Company DescriptionEssent Group Ltd. is a leading private mortgage insurance company that operates primarily in the United States. The company provides private mortgage insurance and reinsurance for single-family residential properties. Essent's services are designed to facilitate homeownership for borrowers who have less than a 20% down payment, helping lenders mitigate risk and expand their lending capabilities.
How the Company Makes MoneyEssent Group makes money primarily through the premiums it charges for providing private mortgage insurance to lenders. The company earns revenue from both primary mortgage insurance policies and reinsurance agreements. In primary mortgage insurance, Essent receives premium payments from lenders in exchange for insuring the risk of default on a portion of the loan value, typically covering the top 20% to 30% of the loan. Revenue is also generated from investment income, as the company invests the collected premiums into a diversified portfolio to earn additional income. Key factors contributing to its earnings include the volume of new insurance written, the persistency of existing policies, and the overall credit performance of its insured portfolio. Essent may also engage in strategic partnerships with financial institutions to expand its market reach.
Essent Group Financial Statement Overview
Summary
Essent Group presents a solid financial profile characterized by strong profitability, a robust balance sheet, and effective cash flow management. The company is on a positive growth trajectory with strong revenue increase, but certain areas like operational efficiency metrics and free cash flow consistency could be improved to enhance overall stability.Income Statement
Essent Group shows strong profitability with a consistent increase in net income over the years. The revenue growth rate from 2023 to 2024 was approximately 14.55%, indicating a positive growth trajectory. The net profit margin is robust due to high net income relative to total revenue. However, absence of EBIT and EBITDA in 2024 data limits a complete analysis of operational efficiency.85
Very Positive
Balance Sheet
The company maintains a healthy balance sheet with high stockholders' equity and zero debt as of 2024, minimizing financial risk. The debt-to-equity ratio is favorable, being zero in recent years. However, the equity ratio has slightly decreased over time, which might suggest increased liabilities relative to assets.80
Positive
Cash Flow
Essent Group demonstrates strong cash flow generation with consistent free cash flow growth. The operating cash flow to net income ratio is solid, indicating efficient conversion of net income into cash. However, the growth rate of free cash flow shows some fluctuations, which could be a point of concern.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.24B | 1.09B | 972.15M | 972.12M | 955.15M | Gross Profit |
| 1.24B | 890.30M | 800.41M | 805.27M | 800.46M | EBIT |
| 0.00 | 970.21M | 1.02B | 811.92M | 480.29M | EBITDA |
| 0.00 | 857.66M | 1.01B | 833.98M | 502.50M | Net Income Common Stockholders |
| 729.40M | 696.39M | 831.35M | 681.78M | 413.04M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 131.48M | 141.79M | 4.82B | 5.04B | 4.67B | Total Assets |
| 7.11B | 6.43B | 5.72B | 5.72B | 5.20B | Total Debt |
| 493.96M | 421.92M | 420.86M | 419.82M | 321.72M | Net Debt |
| -131.48M | 280.13M | 339.62M | 338.33M | 218.89M | Total Liabilities |
| 1.51B | 1.32B | 1.26B | 1.49B | 1.34B | Stockholders Equity |
| 5.60B | 5.10B | 4.46B | 4.24B | 3.86B |
| Cash Flow | Free Cash Flow | |||
| 854.77M | 759.00M | 584.84M | 706.76M | 725.49M | Operating Cash Flow |
| 861.53M | 763.00M | 588.82M | 709.26M | 727.93M | Investing Cash Flow |
| -706.93M | -525.57M | -398.87M | -583.17M | -1.15B | Financing Cash Flow |
| -164.91M | -176.88M | -190.20M | -147.43M | 457.97M |
Essent Group Technical Analysis
Negative
54.56
Price Trends
56.66
Negative
56.98
Negative
58.27
Negative
Market Momentum
-0.30
Positive
41.81
Neutral
22.19
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESNT, the sentiment is Negative. The current price of 54.56 is below the 20-day moving average (MA) of 56.69, below the 50-day MA of 56.66, and below the 200-day MA of 58.27, indicating a bearish trend. The MACD of -0.30 indicates Positive momentum. The RSI at 41.81 is Neutral, neither overbought nor oversold. The STOCH value of 22.19 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ESNT.
Essent Group Risk Analysis
Essent Group disclosed 51 risk factors in its most recent earnings report. Essent Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Essent Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $34.05B | 8.11 | 22.02% | ― | 26.24% | -3.87% | |
75 Outperform | $4.64B | 8.18 | 13.40% | 3.09% | 3.79% | 3.86% | |
75 Outperform | $2.72B | 7.82 | 17.38% | ― | 12.43% | 15.32% | |
75 Outperform | $5.77B | 8.23 | 13.63% | 1.99% | 11.88% | 5.54% | |
70 Outperform | $5.64B | 8.23 | 14.75% | 2.12% | 4.52% | 15.94% | |
64 Neutral | $13.80B | 10.64 | 9.23% | 4.22% | 17.66% | -7.66% | |
61 Neutral | $2.72B | 9.63 | 3.87% | ― | 4.06% | 10092.54% |
* Financial Sector Average
Performance Comparison
ESNT
Essent Group
54.56
-0.31
-0.56%
ACGL
Arch Capital Group
90.09
3.63
4.20%
GNW
Genworth Financial
6.49
0.19
3.02%
MTG
MGIC Investment
22.81
2.33
11.38%
RDN
Radian Group
31.07
0.38
1.24%
NMIH
NMI Holdings
34.46
4.33
14.37%
Essent Group Earnings Call Summary
Earnings Call Date: Feb 14, 2025 | % Change Since: -5.78% | Next Earnings Date: May 2, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment. While there are positive aspects such as increased book value, strong persistency, investment income, and successful reinsurance transactions, the decrease in net income, impact of natural disasters on defaults, and losses in title operations present notable challenges.Highlights
Increased Book Value Per Share
Essent Group's book value per share increased by 11% from a year ago, reaching $53.36 as of December 31, 2024.
Strong Persistency and Investment Income
Despite a slight decrease in persistency from last quarter, Essent Group maintained a high persistency rate of 86% and saw a 20% increase in net investment income.
Improved Capital Position
Essent Group announced a new $500 million share repurchase authorization and an 11% increase in the quarterly dividend to $0.31 per share, indicating strong financial health.
Successful Reinsurance Transactions
The company entered into two quota share transactions to provide forward protection for 2025 and 2026 business, with approximately 97% of the portfolio covered by reinsurance.
Lowlights
Decrease in Net Income
Essent Group reported a net income of $168 million for the fourth quarter of 2024, which is a decrease from $175 million a year ago.
Impact of Hurricanes on Defaults
Credit performance in the fourth quarter was impacted by approximately 2,000 defaults in areas affected by Hurricanes Helene and Milton. This increased the provision for losses to $37.2 million, up from $19 million a year ago.
Title Operations Loss
Essent Group's title operations incurred a pre-tax loss of approximately $21 million in the prior year, and the company does not expect any material impact on earnings from this segment in the near term.
Company Guidance
During Essent Group Limited's fourth-quarter earnings call for fiscal year 2024, several key metrics and guidance were provided. The company reported a net income of $168 million for the quarter, with a diluted earnings per share of $1.58. For the full year, net income was $729 million, translating to $6.85 per diluted share, and the return on average equity stood at 14%. As of December 31, 2024, the book value per share was $53.36, an 11% increase from the previous year. Mortgage insurance in force reached $244 billion, reflecting a 2% year-over-year increase. The persistency rate was 86%, with strong credit quality indicated by a weighted average FICO score of 746 and an LTV of 93%. The company highlighted a competitive mortgage industry landscape with a combined ratio target of 35% to 45% for new business. Essent also increased its quarterly dividend by 11% to $0.31 per share and authorized a $500 million share repurchase program through 2026. The PMIERs sufficiency ratio was a robust 178%, with $1.6 billion in excess available assets, indicating a strong capital position.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.