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 solid earnings growth prospects. The company has been witnessing upward earnings estimate revisions, of late, indicating analysts’ optimism regarding its growth potential.
The Zacks Consensus Estimate for its current-year earnings has been revised 1.5% upward over the past 60 days. Thus, the stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moreover, the company’s price performance seems impressive. Its shares have appreciated 45.1% in the past six months compared with the industry’s rise of 24.4%. Given the upward estimate revisions and a solid Zacks Rank, the stock is expected to gain further.
Mentioned below are some other factors that make Essent Group an attractive pick right now.
Earnings per Share Growth: In the last three-five years, Essent Group witnessed earnings per share (EPS) growth of 42.9%, higher than the industry average of 13.6%. The uptrend is likely to continue in the near term, which can be seen from its projected earnings growth rate of 9.3% for 2019 as well as 2020.
The company’s long-term (three-five years) estimated EPS growth rate of 10% promises reward for shareholders.
Strong Leverage: Essent Group’s debt/equity ratio, which stands at 0.00, indicates that the company uses no debt to finance its operations. The industry’s debt/equity ratio stands at 0.66. This reflects the company’s financial stability, even amid adverse economic conditions.
Superior Return on Equity (ROE): Essent Group has an ROE of 21.36% compared with the industry average of 13.05%. This indicates that the company reinvests its cash more efficiently compared with its peers.
Valuation Looks Reasonable: 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 9.14, lower than the industry average of 9.75. Additionally, the company’s PEG ratio of 0.91 is below the industry average of 1.45.
Further, Essent Group has a Value Score of B. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 or 2, offer the best upside potential.
Other Stocks Worth a Look
Some other top-ranked stocks from the finance space are Hilltop Holdings Inc. HTH, Cadence Bancorporation CADE and First Bancorp FBNC. Each of these currently has a Zacks Rank of 2.
Over the past 60 days, Hilltop Holdings witnessed an upward earnings estimate revision of 11.5% for the current year. Its share price has increased 17.2% in the past six months.
Cadence Bancorporation’s Zacks Consensus Estimate for 2019 has been revised 8.8% upward over the past 60 days. Its shares have gained nearly 13.7% in the past six months.
Over the past 60 days, First Bancorp has witnessed an upward earnings estimate revision of 3% for the current year. Its share price has rallied 12.7% in the past six months.
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First Bancorp (FBNC) : Free Stock Analysis Report
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