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Is Essent Group (ESNT) a Great Value Stock Right Now?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Essent Group (ESNT). ESNT is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

ESNT is also sporting a PEG ratio of 0.87. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ESNT's PEG compares to its industry's average PEG of 0.97. Within the past year, ESNT's PEG has been as high as 0.93 and as low as 0.61, with a median of 0.82.

Another valuation metric that we should highlight is ESNT's P/B ratio of 1.86. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. ESNT's current P/B looks attractive when compared to its industry's average P/B of 2.13. ESNT's P/B has been as high as 2.11 and as low as 1.38, with a median of 1.78, over the past year.

Finally, investors will want to recognize that ESNT has a P/CF ratio of 9.34. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.07. Within the past 12 months, ESNT's P/CF has been as high as 9.52 and as low as 5.90, with a median of 8.23.

These are only a few of the key metrics included in Essent Group's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ESNT looks like an impressive value stock at the moment.


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