Critical Contrast: Essent Group (NYSE:ESNT) and Jack Henry & Associates (NASDAQ:JKHY)

Jack Henry & Associates (NASDAQ:JKHY) and Essent Group (NYSE:ESNT) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, institutional ownership, valuation, earnings and profitability.

Profitability

This table compares Jack Henry & Associates and Essent Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Jack Henry & Associates	19.76%	23.49%	16.34%
Essent Group	51.45%	11.91%	9.09%

Risk and Volatility

Jack Henry & Associates has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500. Comparatively, Essent Group has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Jack Henry & Associates and Essent Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Jack Henry & Associates	0	4	11	1	2.81
Essent Group	0	5	3	0	2.38

Jack Henry & Associates presently has a consensus target price of $190.07, suggesting a potential upside of 15.14%. Essent Group has a consensus target price of $71.86, suggesting a potential upside of 4.76%. Given Jack Henry & Associates’ stronger consensus rating and higher probable upside, research analysts plainly believe Jack Henry & Associates is more favorable than Essent Group.

Dividends

Jack Henry & Associates pays an annual dividend of $2.44 per share and has a dividend yield of 1.5%. Essent Group pays an annual dividend of $1.40 per share and has a dividend yield of 2.0%. Jack Henry & Associates pays out 35.0% of its earnings in the form of a dividend. Essent Group pays out 19.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Jack Henry & Associates has raised its dividend for 35 consecutive years and Essent Group has raised its dividend for 6 consecutive years. Essent Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

98.8% of Jack Henry & Associates shares are held by institutional investors. Comparatively, 93.0% of Essent Group shares are held by institutional investors. 0.6% of Jack Henry & Associates shares are held by company insiders. Comparatively, 3.6% of Essent Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Jack Henry & Associates and Essent Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Jack Henry & Associates	$2.54 billion	4.61	$455.75 million	$6.97	23.68
Essent Group	$1.26 billion	4.89	$689.97 million	$7.17	9.57

Essent Group has lower revenue, but higher earnings than Jack Henry & Associates. Essent Group is trading at a lower price-to-earnings ratio than Jack Henry & Associates, indicating that it is currently the more affordable of the two stocks.

Summary

Jack Henry & Associates beats Essent Group on 10 of the 18 factors compared between the two stocks.

About Jack Henry & Associates

Jack Henry & Associates, Inc. is a financial technology company, which engages in the provision of technology solutions and payment processing services. It operates through the following segments: Core, Payments, Complementary, and Corporate and Other. The Core segment provides core information processing platforms to banks and credit unions which consist of integrated applications required to process deposit, loan, and general ledger transactions, and maintain centralized customer and member information. The Payments segment includes secure payment processing tools and services including ATM, debit, and credit card processing services, online and mobile bill pay solutions, ACH origination and remote deposit capture processing, and risk management products and services. The Complementary segment focuses on additional software, hosted processing platforms, and services including call center support, network security management, consulting, and monitoring. The Corporate and Other segment offers hardware and other products. The company was founded by Jerry D. Hall and John W. Henry in 1976 and is headquartered in Monett, MO.

About Essent Group

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