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Published On: Thu, Sep 28th, 2017

How This Mortgage Insurance Firm Benefits From Housing's Growth

Data on the housing market have been mixed, but the homebuilding and mortgage-services industry groups are performing well. In the latter, investors find industry leader Essent Group (ESNT).

The company provides insurance and reinsurance on mortgages, plus other risk-management tools to mortgage lenders and investors. The coverage helps protect lenders by paying them if a borrower defaults on a mortgage. Premiums are paid by homeowners required to have the insurance. For many, a mortgage would not be possible without the coverage. Most policies are in effect for 36 to 156 months.

Essent has the highest three-year average EPS growth rate (51%) of 19 companies in its industry group. Its three-year sales growth rate of 39% is third behind two smaller companies: rival insurer MNI Holdings (NMIH) and loan marketplace provider LendingTree (TREE).

The mortgage group is in the top five of the 197 that IBD tracks. Homebuilders are in the top 15.

Analysts at BTIG upgraded Essent shares to buy from neutral with a price target of 44 on Sept. 12. They saw a 2017 first-half performance that was “significantly better than we had expected on several fronts. … We believe the company is poised to sustain midteens Read Full Article

Source: Sector Leaders Review – IBD

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