Contrasting HCI Group (NYSE:HCI) & Essent Group (ESNT)

Essent Group (NYSE: ESNT) and HCI Group (NYSE:HCI) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Profitability

This table compares Essent Group and HCI Group’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%
HCI Group -5.63% -6.34% -1.75%

Institutional & Insider Ownership

85.8% of Essent Group shares are owned by institutional investors. Comparatively, 76.4% of HCI Group shares are owned by institutional investors. 18.1% of Essent Group shares are owned by insiders. Comparatively, 20.4% of HCI Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations for Essent Group and HCI Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Essent Group 0 2 7 0 2.78
HCI Group 0 1 2 0 2.67

Essent Group currently has a consensus target price of $47.89, suggesting a potential upside of 10.29%. HCI Group has a consensus target price of $43.33, suggesting a potential upside of 44.93%. Given HCI Group’s higher possible upside, analysts plainly believe HCI Group is more favorable than Essent Group.

Dividends

HCI Group pays an annual dividend of $1.40 per share and has a dividend yield of 4.7%. Essent Group does not pay a dividend. HCI Group pays out -84.8% of its earnings in the form of a dividend. Essent Group has increased its dividend for 3 consecutive years.

Earnings & Valuation

This table compares Essent Group and HCI Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Essent Group $458.26 million 9.33 $222.60 million $2.99 14.52
HCI Group $264.45 million 1.11 $29.02 million ($1.65) -18.12

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

Volatility and Risk

Essent Group has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500. Comparatively, HCI Group has a beta of 2.18, meaning that its stock price is 118% more volatile than the S&P 500.

Summary

Essent Group beats HCI Group on 12 of the 17 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 HCI Group

HCI Group, Inc. (HCI) is an insurance holding company. The Company operates through four operating divisions: property and casualty insurance, reinsurance, investment real estate and information technology. Its operations include Insurance Operations and Other Operations. Its Insurance Operations include property and casualty insurance, and reinsurance. The Company, through its subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc. (HCPCI), provides property and casualty insurance to homeowners, condominium owners and tenants on properties located in Florida. HCPCI also offers flood-endorsed and wind-only policies to new and pre-existing Florida customers. Its Other Operations include information technology (IT) and real estate. The Company’s real estate operations consist of multiple properties it owns and operates.

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