Essent Group (NYSE:ESNT – Get Free Report) and Acacia Research (NASDAQ:ACTG – Get Free Report) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.
Dividends
Essent Group pays an annual dividend of $1.40 per share and has a dividend yield of 2.2%. Acacia Research pays an annual dividend of $0.50 per share and has a dividend yield of 11.6%. Essent Group pays out 19.5% of its earnings in the form of a dividend. Acacia Research pays out -333.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Essent Group has raised its dividend for 6 consecutive years. Acacia Research is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares Essent Group and Acacia Research”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Essent Group | $1.26 billion | 4.45 | $689.97 million | $7.17 | 8.71 |
| Acacia Research | $278.37 million | 1.51 | $21.68 million | ($0.15) | -28.80 |
Essent Group has higher revenue and earnings than Acacia Research. Acacia Research is trading at a lower price-to-earnings ratio than Essent Group, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a breakdown of recent ratings and recommmendations for Essent Group and Acacia Research, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Essent Group | 0 | 6 | 3 | 0 | 2.33 |
| Acacia Research | 1 | 0 | 1 | 0 | 2.00 |
Essent Group currently has a consensus target price of $72.00, indicating a potential upside of 15.24%. Acacia Research has a consensus target price of $6.00, indicating a potential upside of 38.89%. Given Acacia Research’s higher possible upside, analysts plainly believe Acacia Research is more favorable than Essent Group.
Insider and Institutional Ownership
93.0% of Essent Group shares are held by institutional investors. Comparatively, 86.7% of Acacia Research shares are held by institutional investors. 3.6% of Essent Group shares are held by company insiders. Comparatively, 1.7% of Acacia Research shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Risk and Volatility
Essent Group has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500. Comparatively, Acacia Research has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500.
Profitability
This table compares Essent Group and Acacia Research’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Essent Group | 51.45% | 11.91% | 9.09% |
| Acacia Research | -5.39% | 0.44% | 0.33% |
Summary
Essent Group beats Acacia Research on 14 of the 17 factors compared between the two stocks.
About Essent Group
Essent Group Ltd., through its subsidiaries, provides private mortgage insurance and reinsurance for mortgages secured by residential properties located in the United States. Its mortgage insurance products include primary, pool, and master policy. The company also provides information technology maintenance and development services; customer support-related services; underwriting consulting; and contract underwriting services, as well as risk management products and title insurance and settlement services. It serves the originators of residential mortgage loans, such as regulated depository institutions, mortgage banks, credit unions, and other lenders. Essent Group Ltd. was incorporated in 2008 and is based in Hamilton, Bermuda.
About Acacia Research
Acacia is a publicly traded (Nasdaq: ACTG) company that is focused on acquiring and operating businesses across the industrial, energy and technology sectors where it believes it can leverage its expertise, significant capital base, and deep industry relationships to drive value. Acacia evaluates opportunities based on the attractiveness of the underlying cash flows, without regard to a specific investment horizon. Acacia operates its businesses based on three key principles of people, process, and performance and has built a management team with demonstrated expertise in research, transactions and execution, and operations and management.
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