DCF Tool

ESNT

Essent Group Ltd – Savings Institutions
essent group ltd., through its subsidiaries, provides private mortgage insurance and reinsurance for mortgages secured by residential properties located in the united states. its mortgage insurance products include primary, pool, and master policy. the company also provides information technology maintenance and development services; customer support-related services; and contract underwriting services. it serves the originators of residential mortgage loans, such as regulated depository institutions, mortgage banks, credit unions, and other lenders. the company was founded in 2008 and is based in hamilton, bermuda.
Analysis Results
Intrinsic Value $190.29
Latest Price $48.39
Relative Value 75% 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 6.7%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 8.5%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of 6.7%, 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)
2023 1.2 1.1
2024 1.28 1.08
2025 1.36 1.07
2026 1.45 1.05
2027 1.55 1.03
Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 24.5 billion. This corresponds to a present value of 15.0 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 5.34 billion. Adding in the terminal value gives a total present value of 20.4 billion.

There are presently 107.0 million outstanding shares, so the intrinsic value per share is 190.29.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 5,171,367,000
Current Cash 0
Current Liabilities 904,678,000
Current Debt 0
Non-Cash Working Capital (NCWC) 4,266,689,000
Change in NCWC 91,542,000
EBIT 988,187,000
Tax Provision 156,834,000
Depreciation and Amortization 3,024,000
Capital Expenditure -3,981,000
Unlevered Free Cash Flow 921,938,000
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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