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

Dividends

Employers pays an annual dividend of $0.60 per share and has a dividend yield of 1.3%. Essent Group does not pay a dividend. Employers pays out 18.8% of its earnings in the form of a dividend.

Profitability

This table compares Employers and Essent Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Employers 13.32% 10.39% 2.40%
Essent Group 51.64% 18.55% 13.15%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Employers and Essent Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Employers 1 0 1 0 2.00
Essent Group 0 2 6 0 2.75

Employers currently has a consensus price target of $44.50, suggesting a potential downside of 5.32%. Essent Group has a consensus price target of $45.88, suggesting a potential upside of 2.19%. Given Essent Group’s stronger consensus rating and higher possible upside, analysts clearly believe Essent Group is more favorable than Employers.

Volatility & Risk

Employers has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500. Comparatively, Essent Group has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500.

Institutional & Insider Ownership

77.4% of Employers shares are owned by institutional investors. Comparatively, 85.8% of Essent Group shares are owned by institutional investors. 3.5% of Employers shares are owned by insiders. Comparatively, 18.1% of Essent Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Employers and Essent Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Employers $779.80 million 1.95 $106.70 million $3.19 14.73
Essent Group $458.26 million 9.64 $222.60 million $2.99 15.01

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

Summary

Essent Group beats Employers on 12 of the 16 factors compared between the two stocks.

Employers Company Profile

Employers Holdings, Inc. is a holding company. Through its insurance subsidiaries, the Company provides workers’ compensation insurance coverage to select, small businesses in low to medium hazard industries. It provides workers’ compensation insurance under a statutory system wherein employers are required to provide coverage for their employees’ medical, disability, vocational rehabilitation, and/or death benefit costs for work-related injuries or illnesses. As of December 31, 2016 the Company provided workers’ compensation insurance in 36 states and the District of Columbia, with a concentration in California. Its insurance subsidiaries include Employers Insurance Company of Nevada (EICN), Employers Compensation Insurance Company (ECIC), Employers Preferred Insurance Company (EPIC) and Employers Assurance Company (EAC). The Company’s insurance products are jointly offered and marketed with and through its partners and alliances.

Essent Group Company Profile

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.

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