Essent Group (ESNT) vs. Allstate (ALL) Critical Analysis

Essent Group (NYSE: ESNT) and Allstate (NYSE:ALL) are both mid-cap financials companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, earnings, analyst recommendations, institutional ownership, profitability, valuation and dividends.

Analyst Ratings

This is a summary of current ratings and target prices for Essent Group and Allstate, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Essent Group 0 2 7 0 2.78
Allstate 1 7 4 0 2.25

Essent Group presently has a consensus target price of $47.89, suggesting a potential upside of 7.83%. Allstate has a consensus target price of $94.50, suggesting a potential downside of 9.54%. Given Essent Group’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Essent Group is more favorable than Allstate.

Dividends

Allstate pays an annual dividend of $1.48 per share and has a dividend yield of 1.4%. Essent Group does not pay a dividend. Allstate pays out 20.6% of its earnings in the form of a dividend. Essent Group has raised its dividend for 6 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Essent Group 51.64% 18.55% 13.15%
Allstate 7.32% 13.11% 2.32%

Insider & Institutional Ownership

85.8% of Essent Group shares are held by institutional investors. Comparatively, 76.4% of Allstate shares are held by institutional investors. 18.1% of Essent Group shares are held by company insiders. Comparatively, 1.5% of Allstate shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

Essent Group has a beta of 1.15, suggesting that its share price is 15% more volatile than the S&P 500. Comparatively, Allstate has a beta of 1.12, suggesting that its share price is 12% more volatile than the S&P 500.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Essent Group $458.26 million 9.54 $222.60 million $2.98 14.90
Allstate $36.53 billion 1.03 $1.88 billion $7.20 14.51

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

Summary

Essent Group beats Allstate on 13 of the 17 factors compared between the two stocks.

Essent Group Company Profile

Essent Group Ltd. is a private mortgage insurance company. The Company is engaged in offering private mortgage insurance and reinsurance for mortgages secured by residential properties located in the United States. Its products and services include mortgage insurance, contract underwriting, and Bermuda-based insurance and reinsurance. The Company’s primary mortgage insurance is offered to customers on individual loans at the time of origination on a flow basis, but can also be written in bulk transactions. Its pool insurance provides additional credit enhancement for certain secondary market and other mortgage transactions. The primary mortgage insurance operations were conducted through Essent Guaranty, Inc. which is a mortgage insurer licensed to write mortgage insurance in all 50 states and the District of Columbia, as of December 31, 2016. It offers primary mortgage insurance, pool insurance and master policy. It provides contract underwriting services through CUW Solutions, LLC.

Allstate Company Profile

The Allstate Corporation (Allstate) is a holding company for Allstate Insurance Company. The Company’s business is conducted principally through Allstate Insurance Company, Allstate Life Insurance Company and other subsidiaries. It is engaged in the property-liability insurance business and the life insurance, retirement and investment products business. Its segments include Allstate Protection, Allstate Financial, Discontinued Lines and Coverages, and Corporate and Other. The Allstate Protection segment sells private passenger auto, homeowners, and other property-liability insurance products through agencies and directly through contact centers and the Internet. The Allstate Financial segment sells life insurance and voluntary accident and health insurance products. The Corporate and Other segment consists of holding company activities and certain non-insurance operations. Its Discontinued Lines and Coverages segment includes results from property-liability insurance coverage.

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