Berkshire Hathaway (NYSE: BRK.A) and Essent Group (NYSE:ESNT) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.

Risk and Volatility

Berkshire Hathaway has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500. Comparatively, Essent Group has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500.

Profitability

This table compares Berkshire Hathaway and Essent Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Berkshire Hathaway 9.08% 5.83% 2.66%
Essent Group 50.92% 18.77% 13.32%

Institutional and Insider Ownership

26.6% of Berkshire Hathaway shares are owned by institutional investors. Comparatively, 81.4% of Essent Group shares are owned by institutional investors. 5.4% of Berkshire Hathaway shares are owned by insiders. Comparatively, 18.1% of Essent Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and price targets for Berkshire Hathaway and Essent Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Berkshire Hathaway 0 2 1 0 2.33
Essent Group 0 1 5 0 2.83

Berkshire Hathaway presently has a consensus target price of $295,000.00, indicating a potential upside of Infinity. Essent Group has a consensus target price of $43.83, indicating a potential upside of 12.16%. Given Berkshire Hathaway’s higher possible upside, analysts plainly believe Berkshire Hathaway is more favorable than Essent Group.

Earnings & Valuation

This table compares Berkshire Hathaway and Essent Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Berkshire Hathaway N/A N/A N/A $13,263.00 N/A
Essent Group $512.83 million 7.12 $362.45 million $2.82 13.86

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

Summary

Essent Group beats Berkshire Hathaway on 9 of the 12 factors compared between the two stocks.

About Berkshire Hathaway

Berkshire Hathaway Inc. is a holding company owning subsidiaries engaged in various business activities. Its segments include Insurance, such as GEICO, Berkshire Hathaway Primary Group, General Re Corporation and Berkshire Hathaway Reinsurance Group; Burlington Northern Santa Fe, LLC, which is engaged in the operation of the railroad system; Berkshire Hathaway Energy, which includes regulated electric and gas utility; Manufacturing, which includes manufacturers of various products, including industrial, consumer and building products; McLane Company, which is engaged in the wholesale distribution of groceries and non-food items; Service and retailing, which includes providers of various services, including fractional aircraft ownership programs, aviation pilot training and various retailing businesses, and Finance and financial products, which includes manufactured housing and related consumer financing, transportation equipment, manufacturing and leasing, and furniture leasing.

About Essent Group

Essent Group Ltd. is a private mortgage insurance company. The Company is engaged in offering private mortgage insurance and reinsurance for mortgages secured by residential properties located in the United States. Its products and services include mortgage insurance, contract underwriting, and Bermuda-based insurance and reinsurance. The Company’s primary mortgage insurance is offered to customers on individual loans at the time of origination on a flow basis, but can also be written in bulk transactions. Its pool insurance provides additional credit enhancement for certain secondary market and other mortgage transactions. The primary mortgage insurance operations were conducted through Essent Guaranty, Inc. which is a mortgage insurer licensed to write mortgage insurance in all 50 states and the District of Columbia, as of December 31, 2016. It offers primary mortgage insurance, pool insurance and master policy. It provides contract underwriting services through CUW Solutions, LLC.

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