4 Reasons to Add Essent Group (ESNT) Stock to Your Portfolio
It seems to be a wise idea to add Essent Group Ltd. ESNT stock to your portfolio now, given the company’s strong fundamentals and decent growth prospects. Supported by a solid balance sheet position, ESNT has been committed to enhancing shareholder value through efficient capital deployments.
Analysts seem optimistic regarding the company’s earnings growth potential. Over the past 60 days, the Zacks Consensus Estimate for ESNT’s current-year earnings has been revised marginally upward. The stock presently carries a Zacks Rank #2 (Buy).
Looking at its price performance, shares of the company have gained 15.5% in the past six months compared with the industry’s 2.1% rise.
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Some other factors mentioned below make Essent Group an attractive pick right now.
Earnings Per Share (EPS) Growth: In the last three-five years, ESNT witnessed EPS growth of 11.9%, higher than the industry average of 4.5%. While the company’s earnings are projected to decline 20.1% this year amid a tough operating backdrop, the trend will likely reverse in the future. In 2024, earnings are projected to grow 10.1%.
Moreover, the company’s long-term (three-five years) estimated EPS growth rate of 10% promises rewards for shareholders.
Revenue Strength: The company’s revenues witnessed a compound annual growth rate of 8.6% over the five-year period ended 2022. The upward trend is expected to continue in the near term. In 2023 and 2024, the company’s revenues are projected to rise 4.9% and 10.4%, respectively.
Superior Return on Equity (ROE): Essent Group has an ROE of 16.47% compared with the industry average of 4.15%. This indicates that the company reinvests its cash more efficiently than its peers.
Favorable Valuation: Essent Group stock looks undervalued right now, with respect to its price-to-earnings (P/E) and PEG ratios. It has a P/E (F1) ratio of 7.47, lower than the industry average of 12.53. Additionally, the company’s PEG ratio of 0.75 is below the industry average of 1.28.
Essent Group has a Value Score of A. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Other Stocks Worth a Look
A couple of other top-ranked stocks from the finance space are Capital Southwest Corporation CSWC and Artisan Partners Asset Management Inc. APAM, carrying a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CSWC’s current fiscal-year earnings has been revised 2% upward over the past 60 days. In the past year, CSWC’s shares have rallied 8.2%.
The Zacks Consensus Estimate for APAM’s 2023 earnings has been revised 2.2% upward over the past 60 days. APAM’s shares have rallied 6.3% in the past 12 months.
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Artisan Partners Asset Management Inc. (APAM) : Free Stock Analysis Report
Essent Group Ltd. (ESNT) : Free Stock Analysis Report
Capital Southwest Corporation (CSWC) : Free Stock Analysis Report
