Enact Holdings, Inc. (ACT): what the price requires
At today's price, Enact Holdings, Inc. (ACT) is priced for 9.7% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/ACT
Headline
| Field | Value |
|---|---|
| Ticker | ACT |
| Company | Enact Holdings, Inc. |
| Current price | $45.60/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Return on equity needed | 9.7% |
| Return on equity now | 12.6% |
| ROE gap | -2.9pp |
| Price-to-book | 1.19x |
Solve inputs: computed at a 8.8% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.2pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -2.49σ |
| cohort percentile (of 80 peers) | 21 |
| sustained it ~10 years at this level | 77% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.77x | 3 | justifies |
| Earnings | 0.80x | 2 | justifies |
| Relative | 0.86x | 3 | justifies |
| Growth | 1.45x | 1 | expensive |
Families that justify the price: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.4%); the inversion above states its own rate.
Per-Model Detail (n=9)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $67.48 | 0.68x | yes | TBVPS $37.46 × 1.80x (ROE (TTM) 12.7% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption)) |
| Relative Valuation | Relative | $53.24 | 0.86x | yes | P/E 11x (static sector reference · 2026-04), scenarios: 9.3x / 11.0x / 12.7x (bear / base = reference held flat / bull), EV/EBITDA 10x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $51.25 | 0.89x | yes | BV/sh $37.46, ROE (TTM) 12.7%, ke 9.3% |
| Two-Stage Excess Return | Asset | $59.50 | 0.77x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $31.49 | 1.45x | yes | Rev $1.2B, growth 2% (input: historical growth; tapered), Terminal P/S: 4.4x / 5.2x / 6.0x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $55.44 | 0.82x | yes | EPS $4.62, growth 4% (input: historical EPS growth), PEG=2.17 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $62.40 | 0.73x | yes | √(22.5 × EPS $4.62 × BVPS $37.46) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $67.26 | 0.68x | yes | EPS $4.62 × (8.5 + 2×4.4%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | $30.74 | 1.48x | yes | EPS $4.62 × (PEG 1.5 × growth 4.4% (input: historical EPS growth)) → PE 6.7x |
| Earnings Yield | Earnings | $49.95 | 0.91x | yes | EPS $4.62 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (buyback) | -3.3% |
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
- Enact is a mono-line private mortgage insurer: it earns a premium for taking the first-loss risk on low-down-payment home loans, and the business is doing well, an adjusted operating return on equity near 12.9% on $272 billion of insurance in force.
- The defining risk is its dependence on the housing-finance plumbing: Enact can write the insurance the GSEs accept only by meeting their capital rules, and the filing warns that failing to comply could force it to "seek the GSEs' prior approval" or stop writing new insurance on loans they buy, which would materially hurt the business.
- Watch the pace of capital return, roughly $500 million planned for 2026 across a $500 million buyback and a growing dividend, because for a well-capitalized insurer earning above its cost of capital, returning excess capital is the main lever on per-share value.
Bull Case
The bull case for Enact is that an insurer earning well above its cost of capital is trading below what the value methods say its capital is worth. Enact has been earning a return on equity around 12.7% on a trailing basis, and roughly 12.9% on an adjusted operating basis, against a cost of equity near 9.3%. An insurer is worth the return it earns on its capital, and a firm clearing its cost of capital by several points deserves to trade at a premium to book value. Enact trades at only about 1.1 times its tangible book value of roughly $37.46 a share, which is a modest premium for that level of profitability, and the value-oriented methods, the book-value-plus-excess-return approach and the peer earnings multiple, all land above today's price.
The quality of the franchise is in its persistence. Mortgage insurance written in a higher-rate environment stays on the books longer, because borrowers have little incentive to refinance away from low-rate loans, and that elevated persistency keeps the high-margin insurance-in-force base earning premium quarter after quarter. Enact carries $272 billion of insurance in force and wrote $13 billion of new insurance in a recent quarter, so the book is both large and being replenished. Because the company prices the first-loss risk on home loans, its margins are structurally high, the underlying business runs at an underwriting margin north of 50%, and credit has been benign.
The capital story is what turns that profitability into shareholder value. Enact is well-capitalized under the GSE rules and is returning excess capital aggressively: about $500 million planned for 2026, including a new $500 million buyback authorization and a quarterly dividend, with the share count already falling about 3.3% a year. For a financial that earns more on its capital than it costs and holds more capital than it needs, the cleanest path to value creation is exactly this, shrink the share count at a discount to intrinsic value while paying a growing dividend. The bull case is a high-return, over-capitalized insurer buying back its own stock below where its capital is worth.
Bear Case
The qualitative problem comes first: Enact does not control the market it serves. It is a mono-line insurer wholly dependent on the U.S. housing-finance system, and its right to write business runs through Fannie Mae and Freddie Mac. The filing is blunt that compliance with the GSE capital rules "requires us to seek the GSEs' prior approval" for certain actions, and that failing those rules could stop it from writing "new insurance on loans acquired by the GSEs, which would have a material adverse effect on our business." A single mono-line insurer whose franchise is licensed by two government-sponsored entities is a business with concentrated political and regulatory risk that no amount of underwriting skill removes.
The cyclical risk is the nature of the product. Mortgage insurance is a bet that homeowners keep paying, and that bet is excellent in a strong housing market and ugly in a weak one. Today's elevated persistency, the same feature the bull cites, is a function of high rates locking borrowers in place; it props up the in-force book but also signals an originations market that is soft, with affordability stretched and new-insurance volume constrained. If a recession lifts unemployment, claims rise just as new business slows, and a mono-line insurer has no other line to cushion the blow. The filing also flags that Enact "may be unable to increase premium rates for various reasons, principally due to competition," so it cannot simply reprice its way out of a downturn.
The valuation tempers the bear rather than feeding it, and it is worth being precise about why. The price already reflects a discount: at about 1.1 times book the market is implying Enact sustains a return on equity of roughly 9.4%, near its cost of capital, even though it has recently earned closer to 12.6%. So the market is not paying for the franchise to keep earning its current returns; it is pricing in a fade toward the cost of capital. The bear is not that the stock is expensive, the value methods say it is cheap, but that the discount may be deserved, because a mono-line, GSE-dependent insurer earning peak-cycle returns in a benign credit environment is exactly the kind of business whose returns the market is right to assume will not persist through the next housing downturn.
Valuation
An insurer is worth the return it earns on its capital, so Enact is read off price-to-book rather than an operating multiple. At $42.42 (June 27, 2026) the stock trades at about 1.1 times its tangible book value of roughly $37.46 a share, and inverting that multiple gives the cleanest statement of the bet: the price assumes Enact sustains a return on equity of about 9.4%, just above its cost of capital. The company has recently been earning closer to 12.6%, so the market is pricing in a meaningful fade from current profitability toward the cost of capital. The price is not demanding; it is conservative.
The value methods consistently land above the price, which is the unusual part. The book-value-plus-excess-return approach, which capitalizes the spread of Enact's return on equity over its cost of equity, sits well above today's price, as does a sector earnings multiple applied to the trailing earnings of roughly $4.62 a share. The price-to-tangible-book model, the right lens for a financial, marks the equity at a premium that reflects the high return on equity, and it too lands above the price. So this is not a case where only a growth method reaches the price; here the static, capital-based methods say the stock is worth more than it trades for, and the gap is the discount the market applies for the mono-line, GSE-dependent, cyclical nature of the business.
For a financial the balance-sheet question is capital adequacy and capital return, not leverage or cash burn. Enact holds capital comfortably above the GSE requirements, which is what funds the roughly $500 million of planned 2026 capital return, the buyback and the dividend, and the steadily falling share count. The downside is bounded by that capital cushion and by the high-margin, high-persistency in-force book; the upside is gated by whether the market re-rates the return on equity it is currently assuming will fade. The decisive question is not solvency, Enact is plainly well-capitalized, but whether the discount to book the value methods flag is a mispricing or a fair charge for a single-product insurer late in a benign credit cycle.
Catalysts
The recent print was a modest beat with a revealing tell. First-quarter 2026 adjusted operating earnings of $1.21 per share edged past the roughly $1.18 expected, though revenue of about $312 million came in a touch light, and the quarter featured elevated persistency, the high-rate effect keeping existing policies on the books longer. The company reported $13 billion of new insurance written, $272 billion of total insurance in force, and an adjusted operating return on equity of 12.9%.
The capital-return cadence is the clearest forward catalyst. Enact authorized a new $500 million share repurchase program and declared a quarterly dividend of $0.21 a share, with roughly $500 million of total capital return planned for 2026. For a well-capitalized insurer earning above its cost of capital, that pace of buyback and dividend is the main mechanism through which value reaches shareholders, and any change to it would move the thesis.
Analyst sentiment is measured rather than bullish. RBC initiated coverage at Sector Perform with a $46 target, and BofA kept a Buy rating while trimming its target to $46, with both pointing to the same constraint: revenue and earnings potential capped by current interest rates and affordability challenges that limit mortgage originations, the shared headwind for mono-line mortgage insurers. The events that matter from here are credit trends as the housing market digests high rates, and any sign that originations, and with them new insurance written, are reaccelerating.
Peer Cohorts (Per Segment, With Filing Citations)
Mortgage Insurance (reported)
- MTG (MGIC Investment Corp)
- (no filing in the citation store)
- ESNT (ESSENT GROUP LTD.)
- (no filing in the citation store)
- RDN (RADIAN GROUP INC)
- (no filing in the citation store)
- NMIH (NMI Holdings, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Enact Q1 2026 results · company announcements, 2026 · RBC and BofA notes, 2026