ESNT
Essent Group Ltd.
$65.48
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 34.6% below fair value
You pay
$65.48
Bear
$62.89
Fair
$100.19
Bull
$122.58
Bear
$62.89
-4.0%
ROTCE 9.1% → 1.14x TBV
Fair
$100.19
+53.0%
ROTCE 12.2% → 1.82x TBV
Bull
$122.58
+87.2%
ROTCE 14.0% → 2.23x TBV
Key Value Driver
ROTCE (12.2%) vs. cost of equity (8.5%)
Implied Market Multiple
1.06x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $65.00 from 19 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $100.19 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $65.00 (from 19 analysts). Our estimate is 72% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly