DCF Tool

ESNT

Essent Group Ltd – Savings Institutions
Essent Group Ltd. is a Bermuda-based holding company (collectively with its subsidiaries, “Essent”) which, through its wholly-owned subsidiary, Essent Guaranty, Inc., offers private mortgage insurance for single-family mortgage loans in the United States. Essent provides private capital to mitigate mortgage credit risk, allowing lenders to make additional mortgage financing available to prospective homeowners. Headquartered in Radnor, Pennsylvania, Essent Guaranty, Inc. is licensed to write mortgage insurance in all 50 states and the District of Columbia, and is approved by Fannie Mae and Freddie Mac. Essent also offers mortgage-related insurance, reinsurance and advisory services through its Bermuda-based subsidiary, Essent Reinsurance Ltd. Essent is committed to supporting environmental, social and governance (“ESG”) initiatives that are relevant to the company and align with the companywide dedication to responsible corporate citizenship that positively impacts the community and people served.
Analysis Results
Intrinsic Value $314.29
Latest Price $34.70
Relative Value 89% undervalued
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Cash Flow (Billions)
Analysis Parameters
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Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of 14.3%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 7.9%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 14.3%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (billion) Present value (billion)
2022 1.43 1.32
2023 1.63 1.4
2024 1.86 1.48
2025 2.13 1.57
2026 2.43 1.66
Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 41.8 billion. This corresponds to a present value of 26.4 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 7.44 billion. Adding in the terminal value gives a total present value of 33.8 billion.

There are presently 108.0 million outstanding shares, so the intrinsic value per share is 314.29.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 5,287,553,000
Current Cash 0
Current Liabilities 1,112,406,000
Current Debt 0
Non-Cash Working Capital (NCWC) 4,175,147,000
Change in NCWC 382,934,000
EBIT 822,314,000
Tax Provision 140,531,000
Depreciation and Amortization 3,379,000
Capital Expenditure -2,498,000
Unlevered Free Cash Flow 1,065,598,000
Current Assets 4,827,195,000
Current Cash 0
Current Liabilities 1,034,982,000
Current Debt 0
Non-Cash Working Capital (NCWC) 3,792,213,000
Change in NCWC 871,013,000
EBIT 490,096,000
Tax Provision 77,055,000
Depreciation and Amortization 3,328,000
Capital Expenditure -2,446,000
Unlevered Free Cash Flow 1,284,936,000
Current Assets 3,560,160,000
Current Cash 0
Current Liabilities 638,960,000
Current Debt 0
Non-Cash Working Capital (NCWC) 2,921,200,000
Change in NCWC 398,676,000
EBIT 659,061,000
Tax Provision 103,348,000
Depreciation and Amortization 3,769,000
Capital Expenditure -3,409,000
Unlevered Free Cash Flow 954,749,000
Current Assets 2,910,472,000
Current Cash 0
Current Liabilities 387,948,000
Current Debt 0
Non-Cash Working Capital (NCWC) 2,522,524,000
Change in NCWC 489,081,000
EBIT 546,699,000
Tax Provision 79,336,000
Depreciation and Amortization 3,404,000
Capital Expenditure -4,054,000
Unlevered Free Cash Flow 955,794,000
Current Assets 2,391,148,000
Current Cash 0
Current Liabilities 357,705,000
Current Debt 0
Non-Cash Working Capital (NCWC) 2,033,443,000
Change in NCWC 756,328,000
EBIT 398,568,000
Tax Provision 18,821,000
Depreciation and Amortization 3,923,000
Capital Expenditure -2,783,000
Unlevered Free Cash Flow 1,137,215,000
Current Assets 1,673,753,000
Current Cash 0
Current Liabilities 396,638,000
Current Debt 0
Non-Cash Working Capital (NCWC) 1,277,115,000
Change in NCWC 213,364,000
EBIT 311,882,000
Tax Provision 89,276,000
Depreciation and Amortization 4,064,000
Capital Expenditure -3,162,000
Unlevered Free Cash Flow 436,872,000
Current Assets 1,325,645,000
Current Cash 0
Current Liabilities 261,894,000
Current Debt 0
Non-Cash Working Capital (NCWC) 1,063,751,000
Change in NCWC 148,800,000
EBIT 228,398,000
Tax Provision 71,067,000
Depreciation and Amortization 3,219,000
Capital Expenditure -4,960,000
Unlevered Free Cash Flow 304,390,000

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