Essent Group: A look at long-term investor profits

Essent Group: A look at long-term investor profits

The current developments around theEssent Group Ltd.(NYSE:ESNT) show that share prices have fallen by 12% in the last few weeks. Despite these short-term declines, there has been only a 21% increase in the share price over the last three years. Given the overall improving market conditions, many shareholders are anything but enthusiastic about this.

Warren Buffett once pointed out in his essay “The Superinvestors of Graham-and-Doddsville” that stock prices do not always reflect the real value of a company. However, an interesting trend has emerged at Essent Group: Earnings per share (EPS) showed annual growth of 7.5% over the last three years, which roughly corresponds to the annual share price increase of 7%. These numbers suggest that the market perception of the company has essentially not changed significantly.

The return for the shareholders in detail

In order to assess the actual success of an investment, it is important to distinguish between the total shareholder return (TSR) and the pure share price return. The TSR also accounts for the performance of dividends that have been reinvested. In the case of Essent Group, the TSR over the last three years was an impressive 29%, while the pure share price return was just 21%. This shows that the dividends have helped to significantly increase the total return.

Over the last year, Essent Group shareholders received a total return of 18%, which was below the market average but better than the average annual return of 3% over a five-year period. This could indicate the company's improvement over time.

Future development and forecasts

While Essent Group has recently experienced positive developments in terms of profitability, the key question remains whether the company will also be able to generate revenue growth. Analyst forecasts could provide further insight into whether EPS growth can be sustained. It should be noted that information about possible insider purchases could also be important and should indicate whether insiders' confidence in the future development of the company is growing.

For those who want to delve deeper, comprehensive analysis and reports on Essent Group's valuation and financial health are available. These reports provide a detailed overview of potential risks and opportunities for investors interested in this company. Further information can be found in the articles by Simply Wall St.