Essent Group Ltd. Common Shares (ESNT)

FairStock Score: 71/100 — STEADY

Key Financials

Strengths

• Generates $351 million in annual free cash flow (5.8% yield on market cap)
• Solid return on equity of 12.2% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.09, providing financial flexibility
• Healthy net profit margin of 12.3% showing consistent profitability
• Attractive 2.2% dividend yield providing steady income returns

Concerns

• Revenue declining at 5.9% year-over-year signals potential demand weakness or market share loss

AI Analysis

Essent Group Ltd. Common Shares is a small-cap financial services company valued at $6.0 billion. The business generates $1.3 billion in annual revenue with a 12.3% net margin and $351 million in free cash flow. From a quality standpoint, Essent shows healthy Altman Z-Score of 3.2 and adequate 12% ROE. On valuation, the stock is deeply undervalued on a P/E basis at 9.4x, with offers a 34% margin of safety vs Graham Number of $97. Growth dynamics show revenue growing at -5.9% and profit growth of -7.7%. The 2.2% dividend yield adds an income component for patient holders. Our composite FairStock Score of 71/100 reflects above-average fundamentals overall. This combination of reasonable valuation, solid returns, and conservative leverage makes it worth a closer look for value-oriented portfolios.

Bull Case

The market underappreciates Essent's consistent 12% ROE at just 9x earnings—a re-rating toward sector peers could unlock 30-50% upside. With $351 million in annual free cash flow (5.8% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the financial services space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer