Essent Group Ltd. (NYSE:ESNT): Poised For Long-Term Success?

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The latest earnings announcement Essent Group Ltd. (NYSE:ESNT) released in December 2018 revealed that the business experienced a strong tailwind, leading to a double-digit earnings growth of 23%. Below, I’ve presented key growth figures on how market analysts predict Essent Group’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Essent Group

Market analysts’ prospects for the coming year seems rather subdued, with earnings increasing by a single digit 9.6%. The growth outlook in the following year seems much more buoyant with rates generating double digit 20% compared to today’s earnings, and finally hitting US$635m by 2022.

NYSE:ESNT Past and Future Earnings, May 1st 2019
NYSE:ESNT Past and Future Earnings, May 1st 2019

While it’s helpful to be aware of the growth each year relative to today’s level, it may be more beneficial gauging the rate at which the business is moving every year, on average. The advantage of this technique is that we can get a better picture of the direction of Essent Group’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 9.6%. This means that, we can anticipate Essent Group will grow its earnings by 9.6% every year for the next couple of years.

Next Steps:

For Essent Group, I’ve compiled three fundamental aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is ESNT worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ESNT is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ESNT? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.