Enact Holdings, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Shareholders might have noticed that Enact Holdings, Inc. (NASDAQ:ACT) filed its quarterly result this time last week. The early response was not positive, with shares down 4.5% to US$32.76 in the past week. Revenues were US$299m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.16 were also better than expected, beating analyst predictions by 16%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Enact Holdings

Following last week's earnings report, Enact Holdings' five analysts are forecasting 2024 revenues to be US$1.21b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be US$4.28, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of US$1.21b and earnings per share (EPS) of US$3.96 in 2024. So the consensus seems to have become somewhat more optimistic on Enact Holdings' earnings potential following these results.

There's been no major changes to the consensus price target of US$36.92, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Enact Holdings, with the most bullish analyst valuing it at US$41.00 and the most bearish at US$33.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Enact Holdings' growth to accelerate, with the forecast 3.7% annualised growth to the end of 2024 ranking favourably alongside historical growth of 1.5% per annum over the past three years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 4.7% annually. It seems obvious that, while the future growth outlook is brighter than the recent past, Enact Holdings is expected to grow slower than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Enact Holdings following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Enact Holdings' revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$36.92, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Enact Holdings analysts - going out to 2026, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Enact Holdings (1 can't be ignored!) that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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