Essent Posts Strong Q2 Results; Hikes Quarterly Dividend

Shares of Essent Group Ltd. (ESNT) rallied 3.6% on Friday after the company reported better-than-expected Q2 results. ESNT offers mortgage insurance, reinsurance and risk management products.

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Essent reported earnings of $1.42 per share in the second quarter, which surpassed analysts’ estimates of $1.26 per share and increased substantially from $0.15 per share a year ago.

Its revenues of $243.3 million grew 3% year-over-year and beat the consensus estimates of $238.5 million. Net premiums earned rose 2.8% year-over-year, while premiums written declined 1.7% over the same period.

Combined ratio (percentage of premiums paid out as claims and expenses) decreased to 23.3% in Q2 from 101.5% in the prior-year period. Essent’s policies-in-force at the end of the quarter was 16.6% higher than the year-ago period. (See Essent stock charts on TipRanks)

The Chairman and CEO of Essent, Mark A. Casale, said, “Our results reflect a favorable operating environment as credit continues to normalize and housing demand remains elevated. Our buy, manage and distribute model is operating on all cylinders and confidence in our economic engine remains high.”

Alongside earnings, the company announced a 5.9% hike in its quarterly cash dividend. The new dividend of $0.18 per share is payable on September 10 to shareholders of record on September 1.

Following the earnings release, RBC Capital analyst Mark Dwelle reiterated a Buy rating on the stock with a price target of $60, implying 25.3% upside potential from current levels.

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus based on 2 Buys and 1 Hold. The average Essent price target of $58 implies 22% upside potential.

TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Essent with 21.2% of investors on TipRanks increasing their exposure to ESNT stock over the past 30 days.