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Essent Group Ltd (ESNT)
:ESNT
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Essent Group
(NYSE:ESNT)
Rating:74Outperform
Price Target:
$64.00
▲(12.74%Upside)
Essent Group (ESNT) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.95B
Dividend Yield2.11%
Average Volume (3M)634.33K
Price to Earnings (P/E)8.3
Beta (1Y)0.60
Revenue Growth9.87%
EPS Growth3.41%
CountryUS
Employees555
SectorFinancial
Sector Strength78
IndustryInsurance - Specialty
Share Statistics
EPS (TTM)1.69
Shares Outstanding101,401,540
10 Day Avg. Volume629,285
30 Day Avg. Volume634,334
Financial Highlights & Ratios
PEG Ratio0.19
Price to Book (P/B)0.93
Price to Sales (P/S)0.00
P/FCF Ratio7.13
Enterprise Value/Market Cap0.76
Enterprise Value/Revenue0.96
Enterprise Value/Gross Profit4.54
Enterprise Value/Ebitda1.25
Forecast
1Y Price Target
$65.63Price Target Upside15.61% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Essent Group Business Overview & Revenue Model
Company DescriptionEssent Group Ltd. (ESNT) is a private mortgage insurance company primarily operating in the United States. The company provides mortgage insurance, reinsurance, and risk management products and services to mortgage lenders and investors. By offering these financial products, Essent helps facilitate homeownership by protecting lenders against potential losses in the event of borrower defaults.
How the Company Makes MoneyEssent Group makes money primarily through the premiums it charges on its mortgage insurance products. The company's revenue model relies on underwriting mortgage insurance policies for lenders, which provide coverage against borrower defaults. These insurance policies are typically required for mortgages where the borrower has a down payment of less than 20%, thus covering a significant portion of the home loan market. Additionally, Essent earns income from its investment portfolio, which consists of the premiums collected and other financial assets. The company also engages in reinsurance activities, where it assumes or cedes risk under various arrangements, further diversifying its revenue streams. Key factors contributing to Essent's earnings include housing market conditions, interest rates, regulatory environment, and relationships with mortgage lenders.
Essent Group Earnings Call Summary
Earnings Call Date:May 09, 2025
(Q1-2025)
| % Change Since: -2.81%|
Next Earnings Date:Aug 01, 2025
Earnings Call Sentiment Neutral
The earnings call presents a mixed outlook. While the company maintains strong financial metrics and continues to return capital to shareholders, there are notable challenges, such as a decrease in net income and ongoing issues in the mortgage origination market.Q1-2025 Updates
Positive Updates
Strong Balance Sheet and Capital Position
Essent Group reported consolidated cash and investments of $6.4 billion as of March 31, with a PMIERs efficiency ratio of 172% and $1.5 billion in excess of loss reinsurance.
Shareholder Returns and Capital Management
The company repurchased nearly 4 million shares for over $200 million and declared a common dividend of $0.31 for the second quarter of 2025.
Persistency and Investment Yields
The persistency rate was 86%, and the annualized investment yield for the first quarter was 3.8%, with new money rates remaining a tailwind for investment income.
Mortgage Insurance Portfolio Growth
U.S. mortgage insurance in force was $245 billion, a 3% increase compared to the previous year, with strong credit quality metrics including a weighted average FICO of 746.
Negative Updates
Decrease in Net Income
Net income for the first quarter of 2025 was $175 million, down from $182 million in the same quarter of the previous year.
Challenges in Mortgage Origination
The mortgage insurance sector is facing challenges due to lower originations impacted by higher interest rates, affordability, and a lack of supply.
Increased Operating Expenses
Mortgage insurance operating expenses increased to $43.6 million in the first quarter, with an expense ratio of 18.7% compared to 17.5% in the previous quarter.
Company Guidance
During the Essent Group Ltd. First Quarter Earnings Conference Call, CEO Mark Casale and CFO David Weinstock provided detailed guidance on the company's financial performance and future outlook. For Q1 2025, Essent reported a net income of $175 million, or $1.69 per diluted share, with an annualized return on average equity of 12%. The U.S. mortgage insurance in force increased by 3% year-over-year to $245 billion, maintaining strong credit quality with an average FICO score of 746 and a 12-month persistency rate of 86%. The company highlighted its solid financial position with $6.4 billion in consolidated cash and investments, a new money yield of over 5%, and a PMIERs sufficiency ratio of 172%. Essent's capital strategy included repurchasing nearly 4 million shares for over $200 million year-to-date through April 30, 2025, and approving a common dividend of $0.31 per share for Q2. The company remains optimistic about long-term growth despite near-term economic headwinds, with a focus on maintaining a conservative balance sheet and optimizing shareholder returns.Essent Group Financial Statement Overview
Summary
Essent Group shows strong profitability, a robust balance sheet, and effective cash flow management. However, operational efficiency metrics and free cash flow consistency could be improved.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 | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.00B | 1.27B | 1.13B | 1.02B | 1.03B | 955.15M |
| Gross Profit | 992.40M | 1.27B | 1.13B | 1.02B | 1.03B | 955.15M |
| EBITDA | 894.12M | 896.59M | 857.66M | 1.01B | 833.98M | 502.50M |
| Net Income | 723.12M | 729.40M | 696.39M | 831.35M | 681.78M | 413.04M |
Balance Sheet | ||||||
| Total Assets | 7.20B | 7.11B | 6.43B | 5.72B | 5.72B | 5.20B |
| Cash, Cash Equivalents and Short-Term Investments | 208.07M | 131.48M | 141.79M | 4.82B | 5.04B | 4.67B |
| Total Debt | 0.00 | 493.96M | 421.92M | 420.86M | 419.82M | 321.72M |
| Total Liabilities | 1.55B | 1.51B | 1.32B | 1.26B | 1.49B | 1.34B |
| Stockholders Equity | 5.66B | 5.60B | 5.10B | 4.46B | 4.24B | 3.86B |
Cash Flow | ||||||
| Free Cash Flow | 853.66M | 854.77M | 759.00M | 584.84M | 706.76M | 725.49M |
| Operating Cash Flow | 866.16M | 861.53M | 763.00M | 588.82M | 709.26M | 727.93M |
| Investing Cash Flow | -500.10M | -706.93M | -525.57M | -398.87M | -583.17M | -1.15B |
| Financing Cash Flow | -322.26M | -164.91M | -176.88M | -190.20M | -147.43M | 457.97M |
Essent Group Technical Analysis
Negative
56.77
Price Trends
58.68
Negative
57.07
Negative
57.25
Negative
Market Momentum
0.22
Positive
37.00
Neutral
2.85
Positive
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 56.77 is below the 20-day moving average (MA) of 59.79, below the 50-day MA of 58.68, and below the 200-day MA of 57.25, indicating a bearish trend. The MACD of 0.22 indicates Positive momentum. The RSI at 37.00 is Neutral, neither overbought nor oversold. The STOCH value of 2.85 is Positive, 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 (67)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
84 Outperform | $5.58B | 8.36 | 14.09% | 2.31% | 4.33% | 10.21% | |
79 Outperform | $6.31B | 8.60 | 15.12% | 1.96% | 4.64% | 15.36% | |
79 Outperform | $3.13B | 8.33 | 17.38% | ― | 11.61% | 14.35% | |
78 Outperform | $4.79B | 9.07 | 13.22% | 2.86% | 2.95% | 4.08% | |
74 Outperform | $5.95B | 8.31 | 13.29% | 2.11% | 9.87% | 3.41% | |
68 Neutral | $6.17B | 37.34 | 3.23% | 3.60% | 0.96% | -27.04% | |
67 Neutral | $16.86B | 11.90 | 9.77% | 3.76% | 12.07% | -8.35% |
* Financial Sector Average
Performance Comparison
ESNT
Essent Group
56.77
-0.77
-1.34%
FAF
First American Financial
56.57
2.10
3.86%
MTG
MGIC Investment
25.87
3.93
17.91%
RDN
Radian Group
34.24
2.18
6.80%
NMIH
NMI Holdings
38.59
3.03
8.52%
ACT
Enact Holdings
35.49
4.57
14.78%
Essent Group Corporate Events
Financial DisclosuresRegulatory Filings and Compliance
Essent Group Adopts New Financial Reporting Standards
Neutral
Mar 27, 2025
In November 2023, the Financial Accounting Standards Board issued an update requiring public entities to disclose significant expenses of their reportable segments. Essent Group adopted this standard on a retrospective basis, disclosing annual segment information in its 2024 Form 10-K. The company will continue to provide quarterly and year-to-date segment information in its future filings. This change aims to improve transparency in financial reporting, impacting how Essent Group presents its financial performance to stakeholders.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.