Recent Move in Enact Holdings Stock

Enact Holdings (ACT) has drawn fresh attention after recent trading left the stock at $46.52, with gains over the past week, month, and past three months prompting investors to reassess its valuation.

The recent move in Enact Holdings comes on top of a 17.42% year to date share price return and a 36.42% total shareholder return over the past year. The 3 year total shareholder return of 92.56% points to strong long term compounding for investors who have held the stock over several years.

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After Enact Holdings' strong recent run, some investors will be tempted to lock in exposure now, while others may prefer to wait for a cooler entry. So how does the current valuation stack up against the fundamentals?

Most Popular Narrative: 2% Overvalued

At a last close of $46.52, Enact Holdings sits slightly above the most widely followed fair value estimate of $45.75, which is built around modest growth and capital returns.

Strategic capital flexibility, demonstrated by a robust PMIERs sufficiency ratio and a substantial increase in planned capital returns ($400 million for 2025), positions Enact to sustain attractive dividends and share repurchases, which will directly support EPS and ROE in future periods.

Read the complete narrative. Read the complete narrative.

Curious what kind of earnings profile and margin path can underpin that fair value, even with only modest revenue growth built in and ongoing buybacks reshaping per share numbers.

The narrative blends relatively low forecast revenue growth with firm profit margins and sizeable reductions in share count, using a discount rate of 7.38% and a future P/E that stays below the wider US diversified financials average. Analysts in that narrative appear to be assuming that, over time, disciplined capital returns and stable profitability do much of the heavy lifting for shareholder value, rather than aggressive top line expansion.

Result: Fair Value of $45.75 (ABOUT RIGHT)

However, Enact Holdings still faces meaningful risks, including weaker mortgage origination volumes, as well as potential regulatory or policy changes that could pressure revenue and margins.

Another View: Enact Holdings Through the DCF Lens

The analyst narrative suggests Enact Holdings is only about 2% above its $45.75 fair value, but the Simply Wall St DCF model paints a very different picture. On that cash flow based view, ACT at $46.52 screens as trading at roughly a 50.5% discount to an estimated value of $93.94. For an investor comparing these two frameworks, the question is which set of assumptions feels more realistic for the long run.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Enact Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 47 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With mixed signals around Enact Holdings, this is a good moment to review the underlying data yourself and decide where you stand. To weigh up both the concerns and the potential upside in one place, start with our breakdown of 1 key reward and 3 important warning signs

Looking for more investment ideas beyond Enact Holdings?

Do not stop at Enact Holdings. The market offers plenty of other angles, and missing them could mean passing on opportunities that better fit your goals and risk comfort.

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• Hunt for strong businesses trading below their estimated worth with the focused 47 high quality undervalued stocks
• Seek out potential future standouts with solid fundamentals using the carefully curated screener containing 20 high quality undiscovered gems

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.