Essent Beneish M Score

ESNT
 Stock
  

USD 38.06  0.04  0.11%   

This module uses fundamental data of Essent to approximate the value of its Beneish M Score. Essent M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Continue to Essent Piotroski F Score and Essent Altman Z Score analysis.
  
Essent Issuance Repayment of Debt Securities is comparatively stable at the moment as compared to the past year. Essent reported Issuance Repayment of Debt Securities of 94.15 Million in 2021. Long Term Debt to Equity is likely to gain to 0.60 in 2022, whereas Total Debt is likely to drop slightly above 369.4 M in 2022. Essent Cash and Equivalents Turnover is comparatively stable at the moment as compared to the past year. Essent reported Cash and Equivalents Turnover of 7.05 in 2021. Return on Investment is likely to gain to 5.55 in 2022, whereas Quick Ratio is likely to drop 1.21 in 2022.
At this time, it appears that Essent Group is an unlikely manipulator. The earnings manipulation may begin if Essent's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by Essent executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of Essent's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
-2.62
Beneish M Score - Unlikely Manipulator
Elasticity of Receivables0.96Focus
Asset Quality1.28Focus
Expense Coverage1.04Focus
Gross Margin Strengs1.11Focus
Accruals Factor1.04Focus
Depreciation Resistance0.85Focus
Net Sales Growth0.9Focus
Financial Leverage Condition1.01Focus

Essent Beneish M-Score Indicator Trends

The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if Essent's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
Current ValueLast YearChange From Last Year 10 Year Trend
Selling General and Administrative Expense156.5 M166.9 M
Notably Down
Increasing
Slightly volatile
Revenues867.8 M959.7 M
Moderately Down
Increasing
Slightly volatile
Trade and Non Trade Receivables40.1 M46.2 M
Fairly Down
Increasing
Slightly volatile
Property Plant and Equipment Net11.5 M11.9 M
Sufficiently Down
Increasing
Slightly volatile
Operating Income50.8 M49.5 M
Fairly Up
Increasing
Very volatile
Net Cash Flow from Operations88.1 M63.2 M
Significantly Up
Decreasing
Very volatile
Current Liabilities201.2 M215.2 M
Notably Down
Increasing
Slightly volatile
Total Liabilities591.2 M669.3 M
Fairly Down
Increasing
Slightly volatile
Investments5.5 B5.1 B
Significantly Up
Increasing
Slightly volatile
Gross Margin10.529.47
Significantly Up
Decreasing
Slightly volatile
Depreciation Amortization and AccretionM3.4 M
Fairly Up
Decreasing
Slightly volatile
Total Debt369.4 M419.8 M
Fairly Down
Increasing
Slightly volatile
Current Assets370.2 M442.2 M
Fairly Down
Increasing
Slightly volatile
Total Assets1.1 B1.3 B
Fairly Down
Increasing
Slightly volatile

Essent Group Beneish M-Score Driver Matrix

One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between Essent's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Essent in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Essent's degree of accounting gimmicks and manipulations.

About Essent Beneish M Score

M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.

Depreciation Amortization and Accretion

4.02 Million

Essent Depreciation Amortization and Accretion is comparatively stable at the moment as compared to the past year. Essent reported Depreciation Amortization and Accretion of 3.38 Million in 2021

Essent Earnings Manipulation Drivers

Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as Essent. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
201720182019202020212022 (projected)
Trade and Non Trade Receivables29.75 M36.88 M40.66 M50.14 M46.16 M40.07 M
Revenues1.03 B1.03 B974.1 M896.5 M959.7 M867.82 M
Total Assets1.24 B1.27 B1.21 B1.27 B1.28 B1.12 B
Current Assets371.6 M377.5 M364.4 M396.6 M442.2 M370.17 M
Property Plant and Equipment Net6.98 M7.63 M17.31 M15.1 M11.92 M11.48 M
Depreciation Amortization and Accretion3.92 M3.4 M3.77 M3.33 M3.38 M4.02 M
Selling General and Administrative Expense145.53 M150.9 M165.37 M154.69 M166.86 M156.5 M
Total Liabilities627.4 M680 M673.1 M647.4 M669.3 M591.2 M
Current Liabilities246.8 M246.9 M288.1 M206.4 M215.2 M201.21 M
Total Debt248.59 M223.66 M224.24 M321.72 M419.82 M369.37 M
Operating Income5.5 M982.1 M79.8 M21.9 M49.5 M50.8 M
Net Cash Flow from Operations77.4 M99.1 M76.4 M103.3 M63.2 M88.12 M
Investments2.31 B2.79 B3.43 B4.65 B5.13 B5.54 B

About Essent Fundamental Analysis

The Macroaxis Fundamental Analysis modules help investors analyze Essent Group's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Essent using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Essent Group based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Please read more on our fundamental analysis page.
Essent Group Ltd., through its subsidiaries, provides private mortgage insurance and reinsurance for mortgages secured by residential properties located in the United States. The company was founded in 2008 and is based in Hamilton, Bermuda. Essent operates under InsuranceSpecialty classification in the United States and is traded on New York Stock Exchange. It employs 349 people.

Essent Investors Sentiment

The influence of Essent's investor sentiment on the probability of its price appreciation or decline could be a good factor in your decision-making process regarding taking a position in Essent. The overall investor sentiment generally increases the direction of a stock movement in a one-year investment horizon. However, the impact of investor sentiment on the entire stock markets does not have a solid backing from leading economists and market statisticians.
Investor biases related to Essent's public news can be used to forecast risks associated with investment in Essent. The trend in average sentiment can be used to explain how an investor holding Essent can time the market purely based on public headlines and social activities around Essent Group. Please note that most equiteis that are difficult to arbitrage are affected by market sentiment the most.
Essent's market sentiment shows the aggregated news analyzed to detect positive and negative mentions from the text and comments. The data is normalized to provide daily scores for Essent's and other traded tickers. The bigger the bubble, the more accurate is the estimated score. Higher bars for a given day show more participation in the average Essent's news discussions. The higher the estimated score, the more favorable is the investor's outlook on Essent.
Some investors attempt to determine whether the market's mood is bullish or bearish by monitoring changes in market sentiment. Unlike more traditional methods such as technical analysis, investor sentiment usually refers to the aggregate attitude towards Essent in the overall investment community. So, suppose investors can accurately measure the market's sentiment. In that case, they can use it for their benefit. For example, some tools to gauge market sentiment could be utilized using contrarian indexes, Essent's short interest history, or implied volatility extrapolated from Essent options trading.

Pair Trading with Essent

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Essent position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Essent will appreciate offsetting losses from the drop in the long position's value.

Moving together with Essent

+0.76BLKBlackRock Fiscal Year End 13th of January 2023 PairCorr
+0.72BSACBanco Santander Chile Normal TradingPairCorr
The ability to find closely correlated positions to Essent could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Essent when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Essent - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Essent Group to buy it.
The correlation of Essent is a statistical measure of how it moves in relation to other equities. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Essent moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Essent Group moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Essent can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching
Continue to Essent Piotroski F Score and Essent Altman Z Score analysis. You can also try Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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Is Essent's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Essent. If investors know Essent will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Essent listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth YOY
(0.1) 
Market Capitalization
4.1 B
Quarterly Revenue Growth YOY
(0.08) 
Return On Assets
0.1171
Return On Equity
0.2044
The market value of Essent Group is measured differently than its book value, which is the value of Essent that is recorded on the company's balance sheet. Investors also form their own opinion of Essent's value that differs from its market value or its book value, called intrinsic value, which is Essent's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Essent's market value can be influenced by many factors that don't directly affect Essent's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Essent's value and its price as these two are different measures arrived at by different means. Investors typically determine Essent value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Essent's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.