Head to Head Analysis: Essent Group (NYSE:ESNT) vs. CNA Financial (NYSE:CNA)

Essent Group (NYSE:ESNT) and CNA Financial (NYSE:CNA) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, earnings, institutional ownership, analyst recommendations, risk and profitability.

Institutional & Insider Ownership

93.0% of Essent Group shares are held by institutional investors. Comparatively, 98.5% of CNA Financial shares are held by institutional investors. 2.9% of Essent Group shares are held by insiders. Comparatively, 0.4% of CNA Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Essent Group and CNA Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Essent Group	$1.29 billion	4.60	$729.40 million	$6.85	8.82
CNA Financial	$14.27 billion	0.89	$959.00 million	$3.21	14.56

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Essent Group	56.36%	12.66%	9.98%
CNA Financial	5.99%	11.85%	1.85%

Volatility & Risk

Essent Group has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, CNA Financial has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations for Essent Group and CNA Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Essent Group	1	3	5	0	2.44
CNA Financial	1	2	0	0	1.67

Essent Group currently has a consensus price target of $64.83, indicating a potential upside of 7.36%. CNA Financial has a consensus price target of $50.50, indicating a potential upside of 8.02%. Given CNA Financial’s higher possible upside, analysts plainly believe CNA Financial is more favorable than Essent Group.

Dividends

Essent Group pays an annual dividend of $1.24 per share and has a dividend yield of 2.1%. CNA Financial pays an annual dividend of $1.84 per share and has a dividend yield of 3.9%. Essent Group pays out 18.1% of its earnings in the form of a dividend. CNA Financial pays out 57.3% 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 and CNA Financial has raised its dividend for 9 consecutive years. CNA Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Essent Group beats CNA Financial on 10 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 CNA Financial

CNA Financial Corporation provides commercial property and casualty insurance products in the United States and internationally. It operates through Specialty, Commercial, International, Life & Group, and Corporate & Other segments. The company offers professional liability coverages and risk management services to various professional firms, including architects, real estate agents, and accounting and law firms; directors and officers, employment practices, fiduciary, and fidelity and cyber coverages to small and mid-size firms, public and privately held firms, and not-for-profit organizations; professional and general liability, as well as associated casualty coverages for healthcare industry; surety and fidelity bonds; and warranty and alternative risks products. It also provides property, marine, boiler, and machinery coverage insurance products; casualty insurance products comprising workers' compensation, general and product liability, commercial auto, umbrella, and excess and surplus coverages; specialized loss-sensitive insurance programs and total risk management services; and run-off long term care policies. The company was founded in 1853 and is based in Chicago, Illinois. CNA Financial Corporation operates as a subsidiary of Loews Corporation.