Essent Group (NYSE: ESNT) and Berkshire Hathaway (NYSE:BRK-B) are both large-cap property & casualty insurance – nec companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, dividends, valuation, analyst recommendations, earnings, profitability and institutional ownership.

Analyst Recommendations

This is a summary of recent ratings for Essent Group and Berkshire Hathaway, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Essent Group 0 2 5 0 2.71
Berkshire Hathaway 0 0 0 0 N/A

Essent Group currently has a consensus target price of $44.86, suggesting a potential upside of 10.84%. Given Essent Group’s higher probable upside, research analysts clearly believe Essent Group is more favorable than Berkshire Hathaway.

Profitability

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

Net Margins Return on Equity Return on Assets
Essent Group 50.92% 18.77% 13.32%
Berkshire Hathaway 7.57% 5.76% 2.65%

Institutional & Insider Ownership

81.6% of Essent Group shares are owned by institutional investors. 18.1% of Essent Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Essent Group $458.26 million 8.69 $222.60 million $2.81 14.40
Berkshire Hathaway N/A N/A N/A $13,262.31 0.01

Essent Group has higher revenue and earnings than Berkshire Hathaway. Berkshire Hathaway 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 & Risk

Essent Group has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500. Comparatively, Berkshire Hathaway has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500.

Summary

Essent Group beats Berkshire Hathaway on 9 of the 10 factors compared between the two stocks.

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.

Berkshire Hathaway Company Profile

Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in various business activities. Its segments include Insurance, such as GEICO, Berkshire Hathaway Primary Group, General Re Corporation and Berkshire Hathaway Reinsurance Group; Burlington Northern Santa Fe, LLC, which is engaged in the operation of the railroad system; Berkshire Hathaway Energy, which includes regulated electric and gas utility; Manufacturing, which includes manufacturers of various products, including industrial, consumer and building products; McLane Company, which is engaged in the wholesale distribution of groceries and non-food items; Service and retailing, which includes providers of various services, including fractional aircraft ownership programs, aviation pilot training and various retailing businesses, and Finance and financial products, which includes manufactured housing and related consumer financing, transportation equipment, manufacturing and leasing, and furniture leasing.

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