Are Investors Undervaluing Essent Group (ESNT) Right Now?
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Essent Group (ESNT) is a stock many investors are watching right now. ESNT is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 4.86. This compares to its industry's average Forward P/E of 8.91. Over the past 52 weeks, ESNT's Forward P/E has been as high as 7.93 and as low as 4.86, with a median of 5.98.
We also note that ESNT holds a PEG ratio of 0.49. 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 0.71. Over the past 52 weeks, ESNT's PEG has been as high as 0.79 and as low as 0.49, with a median of 0.60.
Another valuation metric that we should highlight is ESNT's P/B ratio of 0.97. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.40. Over the past 12 months, ESNT's P/B has been as high as 1.29 and as low as 0.87, with a median of 1.04.
Finally, investors will want to recognize that ESNT has a P/CF ratio of 4.64. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 8.15. Over the past 52 weeks, ESNT's P/CF has been as high as 7.57 and as low as 4.03, with a median of 4.90.
If you're looking for another solid Financial - Mortgage & Related Services value stock, take a look at UWM (UWMC). UWMC is a # 2 (Buy) stock with a Value score of A.
Additionally, UWM has a P/B ratio of 0.10 while its industry's price-to-book ratio sits at 1.40. For UWMC, this valuation metric has been as high as 0.19, as low as 0.08, with a median of 0.11 over the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that Essent Group and UWM are likely undervalued currently. And when considering the strength of its earnings outlook, ESNT and UWMC sticks out as one of the market's strongest value stocks.
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Essent Group Ltd. (ESNT) : Free Stock Analysis Report
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