Essent Group (NYSE: ESNT) and Erie Indemnity (NASDAQ:ERIE) are both mid-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, dividends, profitability, risk and institutional ownership.
Erie Indemnity pays an annual dividend of $3.36 per share and has a dividend yield of 2.8%. Essent Group does not pay a dividend. Erie Indemnity pays out 89.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Essent Group has raised its dividend for 22 consecutive years.
89.1% of Essent Group shares are held by institutional investors. Comparatively, 31.0% of Erie Indemnity shares are held by institutional investors. 18.1% of Essent Group shares are held by company insiders. Comparatively, 46.8% of Erie Indemnity shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Volatility & Risk
Essent Group has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500. Comparatively, Erie Indemnity has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500.
This table compares Essent Group and Erie Indemnity’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings & Valuation
This table compares Essent Group and Erie Indemnity’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Essent Group||$576.51 million||6.82||$379.74 million||$3.96||10.12|
|Erie Indemnity||$1.69 billion||3.27||$196.99 million||$3.76||31.88|
Essent Group has higher earnings, but lower revenue than Erie Indemnity. Essent Group is trading at a lower price-to-earnings ratio than Erie Indemnity, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings and recommmendations for Essent Group and Erie Indemnity, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Essent Group presently has a consensus target price of $53.52, suggesting a potential upside of 33.61%. Given Essent Group’s higher possible upside, research analysts clearly believe Essent Group is more favorable than Erie Indemnity.
Essent Group beats Erie Indemnity on 10 of the 16 factors compared between the two stocks.
About Essent Group
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.
About Erie Indemnity
Erie Indemnity Company is a management company. The Company serves as the attorney-in-fact for the subscribers (policyholders) at the Erie Insurance Exchange (Exchange). The Exchange is a reciprocal insurer that writes property and casualty insurance. The Company’s function is to perform certain services for the Exchange relating to the sales, underwriting and issuance of policies on behalf of the Exchange. The sales related services the Company provides include agent compensation, and certain sales and advertising support services. Agent compensation includes scheduled commissions to agents based upon premiums written, as well as additional commissions and bonuses to agents. The underwriting services the Company provides include underwriting and policy processing expenses. It provides information technology services that supports various functions. The remaining services the Company provides include customer service and administrative costs.
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