Enact Holdings (ACT) AI Stock Analysis

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Enact Holdings

(NASDAQ:ACT)

84Outperform

Enact Holdings is well-positioned with a solid financial foundation, strong profitability, and zero debt reliance. Positive technical indicators and attractive valuation metrics, such as a low P/E ratio and strong dividend yield, support the stock's appeal. The earnings call presents a balanced outlook with strong results offset by market challenges. Recent corporate events add to the positive sentiment but have a limited impact on the overall score.

Enact Holdings (ACT) vs. S&P 500 (SPY)

Market Cap

$5.50B

Dividend Yield2.02%

Average Volume (3M)736.91K

Price to Earnings (P/E)8.2

Beta (1Y)0.48

Revenue Growth4.33%

EPS Growth10.21%

CountryUS

Employees421

SectorFinancial

Sector Strength85

IndustryInsurance - Specialty

Share Statistics

EPS (TTM)1.10

Shares Outstanding150,066,270

10 Day Avg. Volume495,322

30 Day Avg. Volume736,910

Financial Highlights & Ratios

PEG Ratio4.41

Price to Book (P/B)1.08

Price to Sales (P/S)0.00

P/FCF Ratio7.63

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$38.67

Price Target Upside5.45% Upside

Rating ConsensusHold

Number of Analyst Covering3

Enact Holdings Business Overview & Revenue Model

Company DescriptionEnact Holdings, Inc. is a leading provider of private mortgage insurance in the United States. The company operates in the financial services sector and primarily focuses on offering mortgage insurance solutions to lenders and borrowers. Enact Holdings aims to help people responsibly achieve and maintain the dream of homeownership by protecting lenders and investors against losses related to borrower defaults.

How the Company Makes MoneyEnact Holdings makes money primarily through the premiums it charges for its mortgage insurance products. The company provides insurance coverage to mortgage lenders, which protects them against potential losses if a borrower defaults on a home loan. These premiums are the core revenue stream for Enact Holdings. Additionally, the company may benefit from investment income generated from the premiums collected, which are invested in various financial instruments. Key factors contributing to its earnings include the volume of new insurance written, the persistency of existing policies, and the overall performance of the housing and mortgage markets.

Enact Holdings Financial Statement Overview

Summary

Enact Holdings demonstrates a strong financial foundation with robust profitability and zero debt reliance. The Income Statement shows consistent revenue growth and high profit margins. The Balance Sheet reflects a solid position with effective management of equity. Cash Flow indicates strong cash generation, though growth potential is moderated by a high base effect.

Income Statement

Very Positive

Enact Holdings shows strong profitability with a consistent increase in Total Revenue from $1,156,686,000 in 2023 to $1,201,774,000 in 2024, representing a revenue growth of approximately 4.2%. The company maintains a high Gross Profit Margin of 100% due to zero cost of goods sold. Additionally, a Net Profit Margin of 57.2% in 2024 indicates robust profitability, supported by a consistent rise in EBIT Margin from 78.3% in 2023 to 82.2% in 2024. However, the absence of reported EBITDA figures could limit the comprehensive analysis of operational efficiency.

Balance Sheet

Very Positive

The balance sheet reflects a solid financial position with a Debt-to-Equity Ratio of 0 in 2024, demonstrating no reliance on debt financing. A Return on Equity (ROE) of 13.8% in 2024 underscores effective management in generating profits from shareholders’ equity. Additionally, an Equity Ratio of 76.6% suggests a strong equity base relative to total assets, which enhances financial stability and reduces financial risk.

Cash Flow

Very Positive

The cash flow statement indicates healthy cash generation with an Operating Cash Flow to Net Income Ratio of 1.0 in 2024, showing efficient conversion of net income into cash. A Free Cash Flow of $686,262,000 in 2024 demonstrates strong cash availability for reinvestment or shareholder returns. However, the Free Cash Flow Growth Rate is limited due to a high base effect from the prior year, indicating moderate growth potential in cash flow.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.22B	1.20B	1.15B	1.10B	1.12B	1.11B
	Gross Profit
1.22B	1.20B	1.15B	1.10B	1.12B	1.11B
	EBIT
950.48M	940.15M	903.38M	949.92M	691.38M	466.84M
	EBITDA
419.97M	929.22M	0.00	0.00	0.00	466.84M
	Net Income Common Stockholders
692.86M	688.07M	665.51M	704.16M	546.68M	370.42M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
6.45B	6.22B	615.68M	5.40B	5.69B	5.50B
	Total Assets
6.72B	6.52B	6.19B	5.71B	5.87B	5.65B
	Total Debt
0.00	743.05M	745.42M	742.83M	740.42M	738.16M
	Net Debt
-635.27M	143.62M	129.73M	229.06M	314.59M	285.37M
	Total Liabilities
1.60B	1.53B	1.56B	1.61B	742.00M	774.97M
	Stockholders Equity
5.12B	5.00B	4.63B	4.10B	4.11B	3.88B
Cash Flow		Free Cash Flow
725.69M	686.26M	632.04M	567.13M	-113.53M	704.35M
	Operating Cash Flow
725.69M	686.26M	632.04M	560.51M	572.12M	704.35M
	Investing Cash Flow
-296.62M	-320.51M	-229.40M	-220.25M	-398.78M	-1.14B
	Financing Cash Flow
-408.13M	-382.00M	-300.73M	-252.31M	-200.29M	300.30M

Enact Holdings Technical Analysis

Technical Analysis Sentiment

Positive

Last Price36.67

Price Trends

50DMA

34.84

Positive

100DMA

33.92

Positive

200DMA

34.22

Positive

Market Momentum

MACD

0.43

Positive

RSI

58.41

Neutral

STOCH

45.09

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ACT, the sentiment is Positive. The current price of 36.67 is above the 20-day moving average (MA) of 35.92, above the 50-day MA of 34.84, and above the 200-day MA of 34.22, indicating a bullish trend. The MACD of 0.43 indicates Positive momentum. The RSI at 58.41 is Neutral, neither overbought nor oversold. The STOCH value of 45.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ACT.

Enact Holdings Risk Analysis

Enact Holdings disclosed 38 risk factors in its most recent earnings report. Enact Holdings reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Enact Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACT	84 Outperform	$5.50B	8.25	14.09%	2.02%	4.33%	10.21%
MTG	79 Outperform	$6.39B	8.94	15.12%	1.88%	4.64%	15.36%
RDN	78 Outperform	$4.68B	8.86	13.22%	2.84%	2.95%	4.08%
ESNT	78 Outperform	$6.07B	8.76	13.29%	1.92%	9.87%	3.41%
NMIH	78 Outperform	$3.00B	8.29	17.38%	―	11.61%	14.35%
AGO	66 Neutral	$4.23B	10.12	7.90%	1.47%	-4.43%	-45.42%
Sector *	64 Neutral	$12.82B	9.83	7.68%	17000.34%	12.38%	-5.56%

* Financial Sector Average

Performance Comparison

ACT

Enact Holdings

36.54

6.33

20.95%

AGO

Assured Guaranty

86.25

12.18

16.44%

MTG

MGIC Investment

26.70

6.47

31.98%

RDN

Radian Group

34.39

4.61

15.48%

ESNT

Essent Group

59.46

4.69

8.56%

NMIH

NMI Holdings

38.22

4.85

14.53%

Enact Holdings Earnings Call Summary

Earnings Call Date:Apr 30, 2025

(Q1-2025)

% Change Since: 3.06%|

Next Earnings Date:Aug 05, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong financial performance, capital allocation, and favorable insurance metrics. However, challenges such as decreased new insurance written and an increase in losses were noted. The sentiment is balanced between positive financial results and market challenges.

Q1-2025 Updates

Positive Updates

Strong Financial and Operational Results

Enact delivered strong financial and operational results in Q1 2025 with adjusted operating income of $169 million, up 2% year-over-year, and adjusted earnings per share of $1.10, up 6% year-over-year.

Capital Allocation and Shareholder Returns

Enact announced a new $350 million share repurchase program and a 14% increase in dividends, returning over $94 million through share buybacks and quarterly dividends in Q1 2025.

Stable Insurance Metrics

Insurance in-force was $268 billion, up 2% year-over-year. The persistency rate was 84%, with a PMIER Sufficiency ratio of 165%, indicating a strong capital foundation.

Favorable Delinquency and Cure Performance

Total delinquencies improved and were down 5% sequentially, with new delinquencies decreasing by 11%. A reserve release of $47 million was achieved due to a cure rate of 56%.

Negative Updates

Decrease in New Insurance Written

New insurance written was $10 billion, down 26% sequentially and down 7% year-over-year, driven by seasonally lower purchase originations and muted mortgage activity.

Losses and Loss Ratio Increase

Losses in Q1 2025 were $31 million with a loss ratio of 12%, up from $24 million and 10% in the previous quarter, primarily driven by a lower reserve release and incremental new delinquencies.

Challenges in Mortgage Market

Continued elevated mortgage rates and home prices pressured affordability, impacting the overall size of the origination market.

Company Guidance

During the first quarter of 2025, Enact reported strong financial and operational results, showcasing a robust adjusted operating income of $169 million, marking a 2% increase year-over-year. The company achieved an adjusted earnings per share of $1.10, up by 6% from the previous year, and an adjusted return on equity of 13.4%. Enact's insurance in-force reached $268 billion, reflecting a 2% rise year-over-year. The PMIER Sufficiency ratio remained strong at 165%, indicating a solid capital foundation. The company noted a favorable delinquency trend, with total delinquencies improving by 5% sequentially and new delinquencies decreasing by 11%. This performance facilitated a reserve release of $47 million, leading to a loss ratio of 12%. Enact's strategic capital allocation included a new $350 million share repurchase program and a 14% increase in the dividend to $0.21 per share. The company maintained a disciplined approach to expense management, achieving a 9% sequential reduction in expenses, and reaffirmed its 2025 expense guidance range of $220 million to $225 million.

Enact Holdings Corporate Events

Executive/Board ChangesShareholder Meetings

Enact Holdings Appoints H. Elizabeth Mitchell as Director

Positive

Mar 11, 2025

On March 7, 2025, Anne G. Waleski announced her decision not to seek re-election as a director of Enact Holdings, Inc., effective at the company’s 2025 Annual Meeting of Stockholders on May 14, 2025. Her decision was not due to any disagreement with the company. Subsequently, on March 11, 2025, Enact appointed H. Elizabeth Mitchell as a new independent director, temporarily increasing the board size to 12 members until the annual meeting. Ms. Mitchell brings extensive financial and industry experience, having served in various leadership roles across multiple companies. Her appointment is expected to enhance the board’s capabilities and contribute to the company’s growth and shareholder value.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.