Essent Group Ltd. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Last week, you might have seen that Essent Group Ltd. (NYSE:ESNT) released its quarterly result to the market. The early response was not positive, with shares down 5.7% to US$58.98 in the past week. It looks like a credible result overall - although revenues of US$313m were in line with what the analysts predicted, Essent Group surprised by delivering a statutory profit of US$1.91 per share, a notable 13% above expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Essent Group

After the latest results, the eight analysts covering Essent Group are now predicting revenues of US$1.24b in 2024. If met, this would reflect a reasonable 7.0% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be US$7.06, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$1.24b and earnings per share (EPS) of US$6.74 in 2024. So the consensus seems to have become somewhat more optimistic on Essent Group's earnings potential following these results.

The consensus price target rose 5.4% to US$66.10, suggesting that higher earnings estimates flow through to the stock's valuation as well. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Essent Group at US$70.00 per share, while the most bearish prices it at US$62.00. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Essent Group's growth to accelerate, with the forecast 15% annualised growth to the end of 2024 ranking favourably alongside historical growth of 5.4% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 4.7% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Essent Group to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Essent Group's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Essent Group going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Essent Group you should know about.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com