Essent Group’s (NYSE:ESNT) Q2: Beats On Revenue

August 08, 2025 at 06:47 AM EDT

ESNT Cover Image

Mortgage insurance provider Essent Group (NYSE: ESNT) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 2% year on year to $319.1 million. Its GAAP profit of $1.93 per share was 13% above analysts’ consensus estimates.

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Essent Group (ESNT) Q2 CY2025 Highlights:

Net Premiums Earned: $248.8 million (1.2% year-on-year decline)
Revenue: $319.1 million vs analyst estimates of $316.8 million (2% year-on-year growth, 0.7% beat)
Combined Ratio: 22.1%
EPS (GAAP): $1.93 vs analyst estimates of $1.71 (13% beat)
Market Capitalization: $5.78 billion

“We are pleased with our second quarter 2025 financial results, which reflect continued strength in credit, elevated portfolio persistency and increased investment income,” said Mark A. Casale, Chairman and Chief Executive Officer.

Company Overview

Serving as a crucial bridge between homebuyers and the American dream of homeownership, Essent Group (NYSE: ESNT) provides private mortgage insurance and title services that enable lenders to offer home loans with down payments of less than 20%.

Revenue Growth

Insurance companies earn revenue from three primary sources:

The core insurance business itself, often called underwriting and represented in the income statement as premiums
Income from investing the “float” (premiums collected upfront not yet paid out as claims) in assets such as fixed-income assets and equities
Fees from various sources such as policy administration, annuities, or other value-added services

Unfortunately, Essent Group’s 6.6% annualized revenue growth over the last five years was mediocre. This was below our standard for the insurance sector and is a tough starting point for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Essent Group’s annualized revenue growth of 12.2% over the last two years is above its five-year trend, suggesting its demand recently accelerated. Essent Group Year-On-Year Revenue Growth Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Essent Group reported modest year-on-year revenue growth of 2% but beat Wall Street’s estimates by 0.7%.

Net premiums earned made up 82.8% of the company’s total revenue during the last five years, meaning Essent Group barely relies on non-insurance activities to drive its overall growth.

Essent Group Quarterly Net Premiums Earned as % of Revenue

Our experience and research show the market cares primarily about an insurer’s net premiums earned growth as investment and fee income are considered more susceptible to market volatility and economic cycles.

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Book Value Per Share (BVPS)

Insurers are balance sheet businesses, collecting premiums upfront and paying out claims over time. Premiums collected but not yet paid out, often referred to as the float, are invested and create an asset base supported by a liability structure. Book value per share (BVPS) captures this dynamic by measuring these assets (investment portfolio, cash, reinsurance recoverables) less liabilities (claim reserves, debt, future policy benefits). BVPS is essentially the residual value for shareholders.

We therefore consider BVPS very important to track for insurers and a metric that sheds light on business quality. While other (and more commonly known) per-share metrics like EPS can sometimes be lumpy due to reserve releases or one-time items and can be managed or skewed while still following accounting rules, BVPS reflects long-term capital growth and is harder to manipulate.

Essent Group’s BVPS grew at an excellent 12.1% annual clip over the last five years. BVPS growth has also accelerated recently, growing by 13.5% annually over the last two years from $44.24 to $56.98 per share.

Essent Group Quarterly Book Value per Share

Key Takeaways from Essent Group’s Q2 Results

We enjoyed seeing Essent Group beat analysts’ EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its net premiums earned slightly missed. Overall, this print had some key positives. The stock remained flat at $57.06 immediately after reporting.

Indeed, Essent Group had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.

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