Essent Group (ESNT) & MBIA (MBI) Critical Review

Essent Group (NYSE: ESNT) and MBIA (NYSE:MBI) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, dividends, analyst recommendations, risk and valuation.

Volatility & Risk

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Essent Group has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500. Comparatively, MBIA has a beta of 1.96, indicating that its stock price is 96% more volatile than the S&P 500.

Profitability

This table compares Essent Group and MBIA’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Essent Group 65.87% 17.77% 12.67%
MBIA -370.67% -19.69% -4.16%

Analyst Ratings

This is a summary of recent ratings and target prices for Essent Group and MBIA, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Essent Group 0 1 11 0 2.92
MBIA 0 1 2 0 2.67

Essent Group currently has a consensus price target of $51.61, indicating a potential upside of 41.99%. MBIA has a consensus price target of $14.50, indicating a potential upside of 57.95%. Given MBIA’s higher possible upside, analysts clearly believe MBIA is more favorable than Essent Group.

Valuation and Earnings

This table compares Essent Group and MBIA’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Essent Group $576.51 million 6.18 $379.74 million $3.10 11.73
MBIA $433.00 million 1.88 -$1.61 billion N/A N/A

Essent Group has higher revenue and earnings than MBIA.

Insider & Institutional Ownership

89.0% of Essent Group shares are owned by institutional investors. 3.0% of Essent Group shares are owned by insiders. Comparatively, 3.1% of MBIA shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Essent Group beats MBIA on 9 of the 12 factors compared between the two stocks.

Essent Group Company Profile

Essent Group Ltd., through its subsidiaries, provides private mortgage insurance and reinsurance for mortgages secured by residential properties located in the United States. The company also provides information technology maintenance and development services; customer support-related services; and contract underwriting services. It serves originators of residential mortgage loans, such as regulated depository institutions, mortgage banks, credit unions, and other lenders. The company was founded in 2008 and is based in Hamilton, Bermuda.

MBIA Company Profile

MBIA, Inc. operates as holding company, which through its subsidiaries, provides financial guarantee insurance, as well as related reinsurance, advisory and portfolio services and asset management advisory services, for the public and structured finance markets. It operates through the following business segments: U.S. Public Finance Insurance, Corporate, International and Structured Finance Insurance. The U.S. Public Finance Insurance segment is principally conducted through National. National issues financial guarantees for municipal bonds, including tax-exempt and taxable indebtedness of U.S. political subdivisions, as well as utilities, airports, health care institutions, higher educational facilities, student loan issuers, housing authorities and other similar agencies and obligations issued by private entities that finance projects that serve a substantial public purpose. The Corporate segment consists of general corporate activities, including providing general support services to MBIA’s other operating businesses and asset and capital management. The International and Structured Finance Insurance segment is conducted through the MBIA Corp. The company was founded in 1973 and is headquartered in Purchase, NY.

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