Last Update 08 Dec 25

ESNT: Future Returns Will Depend On Execution Amid Larger Buyback And Macro Risks

Analysts have increased their price target on Essent Group by $4 to $71, reflecting slightly higher long term earnings expectations despite largely unchanged assumptions for fair value, discount rate, revenue growth, profit margins, and future valuation multiples.

Analyst Commentary

Recent research commentary reflects a generally constructive view on Essent Group, with modestly higher price targets signaling confidence in the company’s earnings power and balance sheet strength, while still acknowledging execution and macro risks.

Bullish Takeaways

Bullish analysts view the higher price target as confirmation that Essent Group’s earnings trajectory can support a richer valuation multiple relative to prior expectations.
Incremental upside to long term earnings forecasts is seen as evidence that the company is executing well on underwriting discipline and capital deployment, supporting sustainable return on equity.
The stable rating alongside the target increase suggests that the current share price offers a reasonable entry point, with potential for moderate upside as fundamentals compound.
Analysts highlight that modest target increases, even without major changes to growth or margin assumptions, indicate confidence in the durability of Essent Group’s business model through the cycle.

Bearish Takeaways

Bearish analysts caution that maintaining only a neutral style rating, despite a higher target, implies limited upside from current levels and a risk of multiple compression if macro conditions weaken.
There is concern that the valuation already captures much of the expected earnings improvement, leaving less room for error in execution or in the housing and credit cycle.
Some analysts note that the relatively small price target increase underscores the view that growth is steady but not transformational, which could cap re rating potential.
Unchanged assumptions around discount rates and long term growth suggest that any further upside will likely require stronger than expected performance, rather than just rerating on sentiment.

What's in the News

Essent Group has completed the repurchase of 6,049,709 shares, representing about 5.98% of its outstanding stock, for a total of approximately $353.91 million under the buyback program announced on February 14, 2025 (company filing).
Between July 1, 2025 and October 31, 2025, the company repurchased 2,898,598 shares, or roughly 2.91% of shares outstanding, for $172.5 million as part of the same authorized program (company filing).
Essent Group announced a new share repurchase program authorizing up to $500 million of buybacks, with the program effective through December 31, 2027 (company announcement).
The Board of Directors has authorized a buyback plan in November 2025, providing additional flexibility to return capital to shareholders through repurchases (Board authorization).

Valuation Changes

Fair Value: Unchanged at $67.25, indicating no revision to the intrinsic value estimate despite the higher price target.
Discount Rate: Risen slightly from 7.46% to approximately 7.48%, implying a marginally higher required return for investors.
Revenue Growth: Effectively unchanged at about 1.95% annually, signaling stable long term top line expectations.
Net Profit Margin: Edged down slightly from roughly 50.16% to 50.15%, a negligible adjustment to projected profitability.
Future P/E: Increased marginally from about 9.57x to approximately 9.58x, reflecting a very small upward tweak to expected valuation multiples.

Growth in homeownership and digital transformation support ongoing demand, pricing precision, and potential margin expansion in mortgage insurance.
Diversification into risk management and strong capital discipline enhance stability, fee-based revenues, and shareholder returns.
Structural industry changes, technology disruption, and housing market headwinds threaten Essent Group's core revenue streams, competitive position, and future growth prospects.

Catalysts

About Essent Group

Through its subsidiaries, provides private mortgage insurance and reinsurance for mortgages secured by residential properties located in the United States.What are the underlying business or industry changes driving this perspective?

Anticipated long-term growth in homeownership, especially among Millennials and Gen Z, supports steady demand for Essent's core mortgage insurance business, expected to drive sustained increases in policy originations and top-line revenue.
Management is leveraging ongoing digital transformation and advanced analytics, including the proprietary EssentEDGE platform and AI adoption, to price risk more precisely and streamline underwriting, which should help maintain or expand net margins over time.
The company's expansion into adjacent credit risk management, through reinsurance (Essent Re) and advisory services, provides new and growing fee-based revenue streams, which support long-term earnings growth and diversification beyond traditional mortgage insurance.
Essent's strong capital position is enabling substantial buybacks at undervalued price levels, which, combined with disciplined capital allocation and book value growth, is likely to increase earnings per share and shareholder returns.
Embedded equity in the insured portfolio and prudent credit standards reduce future loss ratios and claims exposure, supporting stable profitability and the resilience of net margins even through housing cycles.

Essent Group Earnings and Revenue Growth

Essent Group Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Essent Group's revenue will grow by 2.0% annually over the next 3 years.
Analysts assume that profit margins will shrink from 56.4% today to 51.9% in 3 years time.
Analysts expect earnings to reach $699.0 million (and earnings per share of $7.8) by about September 2028, down from $714.8 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.3x on those 2028 earnings, up from 8.7x today. This future PE is lower than the current PE for the US Diversified Financial industry at 16.5x.
Analysts expect the number of shares outstanding to decline by 7.0% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.59%, as per the Simply Wall St company report.

Essent Group Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Stagnant wage growth and persistent housing affordability challenges may significantly slow the entry of first-time homebuyers, reducing demand for private mortgage insurance and potentially leading to lower long-term policy volumes and revenue growth for Essent Group.
Heavy reliance on Fannie Mae and Freddie Mac for business flow exposes Essent to the risk of regulatory reforms or shifts towards government alternatives, which could directly reduce Essent's top-line revenue if GSE preferences change or if market structure evolves.
Industry-wide adoption of alternative credit models, fintech-driven innovations, and artificial intelligence for mortgage underwriting may disrupt traditional PMI business models, undermining Essent's competitive edge and impacting both net margins and earnings consistency if the company fails to keep pace or successfully innovate.
A slowdown in home price appreciation, or even negative home price trends in certain markets, could increase Essent's exposure to claims and loss ratios on recent vintages that lack sufficient embedded equity, thereby pressuring net income and potentially eroding book value over time.
Increased use of mortgage risk-transfer transactions by GSEs (e.g., credit risk transfers, insurance-linked securities) might structurally reduce the need for traditional private mortgage insurance, shrinking Essent's addressable market and impairing long-term revenue and profitability.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $66.25 for Essent Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $70.0, and the most bearish reporting a price target of just $59.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.3 billion, earnings will come to $699.0 million, and it would be trading on a PE ratio of 9.3x, assuming you use a discount rate of 7.6%.
Given the current share price of $63.05, the analyst price target of $66.25 is 4.8% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analysts Raise Essent Group Price Targets on Improved Credit Performance and Strong Execution