ESSENT GROUP LTD (NYSE:ESNT) - A Potentially Undervalued Stock with Solid Fundamentals

ESSENT GROUP LTD (NYSE:ESNT) was identified as a decent value stock by our screener, which looks for companies with strong valuation metrics while maintaining reasonable profitability, financial health, and growth. ESNT operates in the financial services sector, providing mortgage insurance and related services. Below, we examine why this stock may appeal to value investors.

Valuation

ESNT stands out with a Valuation Rating of 7/10, indicating it is priced attractively relative to its fundamentals:

• P/E Ratio of 8.20 – Well below the industry average (20.12) and the S&P 500 (27.30).
• Forward P/E of 7.54 – Suggests continued undervaluation compared to peers.
• Price/Free Cash Flow – Better than 89% of industry competitors, reinforcing its cheap valuation.

Financial Health

The company earns a strong Health Rating of 8/10, reflecting a stable financial position:

• Low Debt (Debt/Equity of 0.09) – Minimal reliance on borrowing.
• High Liquidity (Current Ratio of 2.85) – Comfortably covers short-term obligations.
• Altman-Z Score of 3.81 – Indicates low bankruptcy risk, outperforming 86% of peers.

Profitability

With a Profitability Rating of 6/10, ESNT delivers consistent earnings:

• Return on Assets (10.04%) – Ranks in the top 12% of its industry.
• Operating Margin (70.07%) – Among the best in the sector.
• Stable Cash Flows – Positive operating cash flow over the past five years.

Growth

While growth is modest (Growth Rating of 4/10), ESNT maintains steady progress:

• Revenue Growth (9.57% YoY) – Outpaces many financial services firms.
• EPS Growth (3.33% YoY) – Shows resilience despite economic fluctuations.

Our Decent Value Stocks screener lists more stocks with similar characteristics. For a deeper dive, review the full fundamental report on ESNT.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own analysis before making investment decisions.