Head to Head Contrast: Stewart Information Services (NYSE:STC) versus Essent Group (NYSE:ESNT)

Stewart Information Services (NYSE:STC) and Essent Group (NYSE:ESNT) are both mid-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, profitability, earnings and risk.

Volatility & Risk

Stewart Information Services has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500. Comparatively, Essent Group has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Stewart Information Services	4.19%	10.07%	5.17%
Essent Group	54.72%	12.09%	9.45%

Valuation and Earnings

This table compares Stewart Information Services 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
Stewart Information Services	$3.09 billion	0.68	$115.54 million	$4.48	15.31
Essent Group	$1.29 billion	4.39	$689.97 million	$6.89	8.74

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

Dividends

Stewart Information Services pays an annual dividend of $2.10 per share and has a dividend yield of 3.1%. Essent Group pays an annual dividend of $1.40 per share and has a dividend yield of 2.3%. Stewart Information Services pays out 46.9% of its earnings in the form of a dividend. Essent Group pays out 20.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Stewart Information Services has raised its dividend for 4 consecutive years and Essent Group has raised its dividend for 6 consecutive years.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Stewart Information Services and Essent Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stewart Information Services	0	0	4	0	3.00
Essent Group	0	6	5	0	2.45

Stewart Information Services currently has a consensus target price of $81.00, indicating a potential upside of 18.06%. Essent Group has a consensus target price of $67.86, indicating a potential upside of 12.74%. Given Stewart Information Services’ stronger consensus rating and higher possible upside, equities analysts plainly believe Stewart Information Services is more favorable than Essent Group.

Institutional and Insider Ownership

96.9% of Stewart Information Services shares are owned by institutional investors. Comparatively, 93.0% of Essent Group shares are owned by institutional investors. 2.9% of Stewart Information Services shares are owned by company insiders. Comparatively, 3.6% of Essent Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Essent Group beats Stewart Information Services on 10 of the 17 factors compared between the two stocks.

About Stewart Information Services

Stewart Information Services Corporation, through its subsidiaries, provides title insurance and real estate transaction related services in the United States and internationally. The company involves in searching, examining, closing, and insuring the condition of the title to real property. It also offers home and personal insurance services; services for tax-deferred exchanges; and digital customer engagement platform services. It also provides appraisal management, online notarization and closing, credit and real estate information, and search and valuation services. The company serves homebuyers and sellers, residential and commercial real estate professionals, mortgage lenders and servicers, title agencies and real estate attorneys, and home builders through direct operations, network of independent agencies, and other businesses. The company was founded in 1893 and is headquartered in Houston, Texas.

About Essent Group

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; underwriting consulting; and contract underwriting services, as well as risk management products and title insurance and settlement services. It serves the originators of residential mortgage loans, such as regulated depository institutions, mortgage banks, credit unions, and other lenders. Essent Group Ltd. was incorporated in 2008 and is based in Hamilton, Bermuda.