ESNT Reported Today

A few months back (post #12332) I touted ESNT as a potentially undervalued stock pick, and also started a position. Since then, ESNT is off 35% for reasons I cannot fathom.

ESNT reported another impressive quarter this morning. Here are the updated pertinent numbers since they went public:

Qtr 1st 2nd 3rd 4th
Earnings
2013 .22
2014 .18 .23 .29 .33
2015 .38 .41 .44 .48

YoY Earnings Growth
2014 50%
2015 111% 78% 52% 45%

Revenue
2013 42
2014 48 54 65 73
2015 80 84 92 97

YoY Revenue Growth
2014 74%
2015 67% 56% 42% 33%

Combined Ratio
2013 73.8 58.7 54.1 57.0
2014 54.4 48.9 42.9 42.3
2015 39.3 37.6 38.4 37.8

Current 1YPEG = 0.15

While the rate of growth is slowing, these are still very impressive numbers. I decided to double my position. Am I missing something?

DT

re: ESNT
re: money pitt

re: you asked 35% for reasons I cannot fathom.

Let’s review Why

http://stockcharts.com/h-sc/ui?s=ESNT&p=D&yr=0&m…

http://stockcharts.com/h-sc/ui?s=ESNT&p=D&yr=0&m…

August 24, 2015 http://stockcharts.com/h-sc/ui?s=ESNT&p=D&yr=0&m… should have been out.

Quillnpenn - a professional Swing Trader

5 Likes

I don’t have a clue about this particular company but the habit of doubling down on a loser can turn a small mistake into a giant disaster.

The driving force behind doubling down is mostly to provide psychological relief. If you feel compelled to “do something” with this lower price, then
add a small bite but nothing compared to your initial position.

3 Likes

The only thing I see is that loan defaults are rising Q over Q and year over year.

Q over Q
Q3-2016 0.29% vs Q4-2016 0.35%

and YoY
Q4-2015 0.20% vs Q4-2016 0.35%

FYI: For what it’s worth, Zacks rates this a strong buy.

-Bob
no position

Quillpen,

I’ve been trying to follow and understand your TA approach. If I understand correctly, applying this approach to SEDG would make SEDG a buy today/tomorrow, correct?

My apologies for deviating from ESNT.

-Bob

“The driving force behind doubling down is mostly to provide psychological relief.” Or to allow you to refuse to delay admitting that the first purchase was a mistake. It also reinforces “ownership bias”

I try to resist doing it, or if I can’t, I try to sell all shares then give myself a set time period before buying any back. To avoid "wash sales, I would wait a month plus a day, or do it in an IRA.

In bear markets good news is often rewarded with further declines . Why? It gives some strength for institutions to sell into. OTOH, bad news sometimes can result in less selling pressure because there are few optimistic buyers.

1 Like

the habit of doubling down on a loser can turn a small mistake into a giant disaster

Agreed. For ESNT, I am still a long ways from what I would consider a full position. If ESNT goes to zero tomorrow it would be annoying, not a disaster. They had a good quarter with reasonable (though slowing) growth in both revenue and earnings, TTM P/E of 11, with a very low (and decreasing) combined ratio. This looks like a good story to me and I think the stock has been drug down along with the rest of the market over the last few months while their business remains strong. If a recession is on the way, and people quit buying houses, this will be a bad buy. But I do like to buy stocks when they are on sale so I dipping into my war chest today.

DT

Bob,

Do nothing as a Swing Trader. The last signal to buy SEDG was on or about December 17th when the 13ema crossed up and over the 50ema. blue line crossing up and over the red line.

However, by using the cheat sheet, there was a buy signal in the CCI4 above panel.

The Cheat Sheet…http://www.onlinetradingconcepts.com/TechnicalAnalysis/Commo…

http://stockcharts.com/h-sc/ui?s=SEDG&p=D&yr=0&m… getting close to buy.

http://stockcharts.com/h-sc/ui?s=SEDG&p=D&yr=0&m… with this chart, your correct, there a buy signal when the price crossed the bottom line of the Kelter channel. You woul then Sell when it crosses back down over the dotted center line (20ma). Notice that on or about December 8th where was a head fake to get out. But, it went back over the dotted line to get back in to sell on January 11th. Back in again on 1/26/16 and then Sell on the 9th of February.

Hope this can help per chart.

Quillnenn -

4 Likes

Never heard of ESNT, but looking at it there is a momentum divergence on the daily chart per RSI at the new lows which is constructive, but on the weekly chart it closed at all time weekly lows which is certainly not.

If you need to be in this, I’d wait to see a better weekly close before doubling down to make sure you aren’t just catching a falling knife

1 Like

I had bookmarked Essent to look into, and when this discussion got derailed with a look into technicals, I kind of forgot about it. Bumping it now in case anyone is interested.

My main question is, what are the drivers that make Essent special? How has it beaten its peers as a company, and how will it continue to do so?

Any ideas on that as a shareholder, DoubtingThomas?