ESNT
Essent Group Ltd.
$64.70
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 43.6% below fair value
You pay
$64.70
Bear
$72.02
Fair
$114.76
Bull
$140.40
Bear
$72.02
+11.3%
ROTCE 9.1% → 1.14x TBV
Fair
$114.76
+77.4%
ROTCE 12.2% → 1.82x TBV
Bull
$140.40
+117.0%
ROTCE 14.0% → 2.23x TBV
Adjust Assumptions
12.2%
8.5%
Key Value Driver
ROTCE (12.2%) vs. cost of equity (8.5%)
Implied Market Multiple
1.03x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (19 analysts)
$70.00
Divergence from AlphaVal
64%
Summary
With ROTCE of 12.2% vs. 8.5% cost of equity, fair P/TBV is 1.82x on $63.08 tangible book, implying $114.76 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 $70.00 (from 19 analysts). Our estimate is 64% 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