ESNT or TREE: Which Is the Better Value Stock Right Now?
Investors interested in Financial - Mortgage & Related Services stocks are likely familiar with Essent Group (ESNT) and Tree.com (TREE). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Essent Group is sporting a Zacks Rank of #2 (Buy), while Tree.com has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that ESNT likely has seen a stronger improvement to its earnings outlook than TREE has recently. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
ESNT currently has a forward P/E ratio of 8.69, while TREE has a forward P/E of 48.76. We also note that ESNT has a PEG ratio of 0.79. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. TREE currently has a PEG ratio of 1.34.
Another notable valuation metric for ESNT is its P/B ratio of 1.88. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, TREE has a P/B of 10.09.
These metrics, and several others, help ESNT earn a Value grade of B, while TREE has been given a Value grade of F.
ESNT has seen stronger estimate revision activity and sports more attractive valuation metrics than TREE, so it seems like value investors will conclude that ESNT is the superior option right now.
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Essent Group Ltd. (ESNT) : Free Stock Analysis Report
LendingTree, Inc. (TREE) : Free Stock Analysis Report
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