ESNT
Essent Group Ltd.
$60.78
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 37.2% below fair value
You pay
$60.78
Bear
$60.72
Fair
$96.75
Bull
$118.36
Bear
$60.72
-0.1%
ROTCE 9.1% → 1.08x TBV
Fair
$96.75
+59.2%
ROTCE 12.2% → 1.72x TBV
Bull
$118.36
+94.7%
ROTCE 14.0% → 2.11x TBV
Key Value Driver
ROTCE (12.2%) vs. cost of equity (8.7%)
Implied Market Multiple
0.99x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $68.75 from 19 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $96.75 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 $68.75 (from 19 analysts). Our estimate is 54% 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