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Should Value Investors Buy Essent Group (ESNT) Stock?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One stock to keep an eye on 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 0.89. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ESNT's PEG compares to its industry's average PEG of 1. Over the last 12 months, ESNT's PEG has been as high as 0.93 and as low as 0.61, with a median of 0.83.

We should also highlight that ESNT has a P/B ratio of 1.91. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.23. Over the past year, ESNT's P/B has been as high as 2.11 and as low as 1.38, with a median of 1.79.

Finally, our model also underscores that ESNT has a P/CF ratio of 9.59. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 14.72. Within the past 12 months, ESNT's P/CF has been as high as 9.64 and as low as 5.90, with a median of 8.33.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Essent Group is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, ESNT feels like a great value stock at the moment.


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