Critical Contrast: National Interstate (NATL) vs. Essent Group (ESNT)

National Interstate (NASDAQ: NATL) and Essent Group (NYSE:ESNT) are both financials companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, analyst recommendations, profitability, dividends, institutional ownership and risk.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
National Interstate N/A N/A N/A $1.38 23.66
Essent Group $512.83 million 7.24 $362.45 million $2.82 14.09

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

Institutional and Insider Ownership

84.9% of National Interstate shares are owned by institutional investors. Comparatively, 81.4% of Essent Group shares are owned by institutional investors. 11.8% of National Interstate shares are owned by insiders. Comparatively, 18.1% of Essent Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

National Interstate has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500. Comparatively, Essent Group has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500.

Dividends

National Interstate pays an annual dividend of $0.56 per share and has a dividend yield of 1.7%. Essent Group does not pay a dividend. National Interstate pays out 40.6% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current ratings for National Interstate and Essent Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Interstate 0 0 0 0 N/A
Essent Group 0 1 5 0 2.83

Essent Group has a consensus price target of $43.83, indicating a potential upside of 10.33%. Given Essent Group’s higher probable upside, analysts plainly believe Essent Group is more favorable than National Interstate.

Profitability

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

Net Margins Return on Equity Return on Assets
National Interstate 5.91% 10.13% 1.94%
Essent Group 50.92% 18.77% 13.32%

Summary

Essent Group beats National Interstate on 10 of the 12 factors compared between the two stocks.

National Interstate Company Profile

National Interstate Corporation and its subsidiaries operate as an insurance holding company that underwrites and sells traditional and alternative property and casualty insurance products to the passenger transportation, trucking and moving and storage industries, general commercial insurance to small businesses in Hawaii and Alaska and personal insurance to owners of recreational vehicles throughout the United States. The Company is a specialty property and casualty insurance company with a focus on the transportation industry. The Company operates through property and casualty insurance segment. The Company offers approximately 40 product lines in the specialty property and casualty insurance market, which it groups into approximately four general business components: alternative risk transfer (ART), transportation, specialty personal lines, and Hawaii and Alaska based on the class of business, insureds’ risk participation or geographic location.

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.

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