Value
7.1/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 9.0 |
| P/S | 6.8 |
| Fwd P/E | 9.4 |
| PEG | 7.1 |
| Analyst target | 3.0 |
- ▸Forward P/E: 9.2x
- ▸PEG: 0.98
- ▸Attractively valued
ACT · Why this verdict
Why Enact Holdings (ACT) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Short interest at 16% of float creates a structural technical overhang that can suppress price appreciation and amplify downside moves, even if the underlying business remains healthy. Risk breakdown | Short interest falls below 8% of float, removing the structural overhang and allowing the stock to trade more freely on fundamental merit. | →Stable |
| CounterA 16% short interest also represents potential fuel for a sharp squeeze if a positive catalyst materializes; continued earnings beats could force short covering and accelerate a move above current resistance more quickly than the overhang implies. | ||
The business delivers net margins of 54%, passes the Rule of 40 with a combined score of 49, and earns a Piotroski F-Score of 8 out of 9 — a quality profile that places it among the strongest franchises in specialty insurance. Quality breakdown | Net margins hold above 50% over the next four quarters, confirming that the profitability profile reflects structural underwriting discipline rather than a peak-cycle tailwind. | →Stable |
| CounterSpecialty mortgage insurance margins are sensitive to housing credit conditions; a deterioration in mortgage delinquency rates could compress the loss ratio and pull net margins below the current 54% level faster than the quality score suggests. | ||
The company has beaten consensus estimates in each of the last four quarters, averaging approximately 4.5% above expectations, with the most recent quarter delivering a positive surprise of 1.2% on an estimate of $1.20. Earnings | The next earnings print, due approximately July 29, 2026, extends the beat streak and keeps average positive surprises above 2% per quarter. | →Stable |
| CounterThe two most recent beats were narrow — 1.2% and 0.9% — suggesting the margin of outperformance is compressing; weak growth noted in the bear case means the beat streak may reflect conservative guidance discipline more than underlying business acceleration. | ||
With only 1.8% headroom remaining to the near-term resistance level of $43.09 and a risk/reward ratio of 0.45-to-1, the current price offers little margin of safety for a new entry, making patience the more disciplined posture. Price targets | Analyst consensus price target rises above $48, restoring more than 10% upside from the current price of $42.34 and improving the risk/reward setup sufficiently to revisit a long. | →Stable |
| CounterBreaks above established resistance often accelerate quickly; if the stock clears $43.09 on strong earnings, the next resistance may be materially higher, and those who waited for a better entry may have missed the move. | ||
Short interest at 16% of float creates a structural technical overhang that can suppress price appreciation and amplify downside moves, even if the underlying business remains healthy.
→StableRisk breakdown
- Expectation
- Short interest falls below 8% of float, removing the structural overhang and allowing the stock to trade more freely on fundamental merit.
CounterA 16% short interest also represents potential fuel for a sharp squeeze if a positive catalyst materializes; continued earnings beats could force short covering and accelerate a move above current resistance more quickly than the overhang implies.
The business delivers net margins of 54%, passes the Rule of 40 with a combined score of 49, and earns a Piotroski F-Score of 8 out of 9 — a quality profile that places it among the strongest franchises in specialty insurance.
→StableQuality breakdown
- Expectation
- Net margins hold above 50% over the next four quarters, confirming that the profitability profile reflects structural underwriting discipline rather than a peak-cycle tailwind.
CounterSpecialty mortgage insurance margins are sensitive to housing credit conditions; a deterioration in mortgage delinquency rates could compress the loss ratio and pull net margins below the current 54% level faster than the quality score suggests.
The company has beaten consensus estimates in each of the last four quarters, averaging approximately 4.5% above expectations, with the most recent quarter delivering a positive surprise of 1.2% on an estimate of $1.20.
→StableEarnings
- Expectation
- The next earnings print, due approximately July 29, 2026, extends the beat streak and keeps average positive surprises above 2% per quarter.
CounterThe two most recent beats were narrow — 1.2% and 0.9% — suggesting the margin of outperformance is compressing; weak growth noted in the bear case means the beat streak may reflect conservative guidance discipline more than underlying business acceleration.
With only 1.8% headroom remaining to the near-term resistance level of $43.09 and a risk/reward ratio of 0.45-to-1, the current price offers little margin of safety for a new entry, making patience the more disciplined posture.
→StablePrice targets
- Expectation
- Analyst consensus price target rises above $48, restoring more than 10% upside from the current price of $42.34 and improving the risk/reward setup sufficiently to revisit a long.
CounterBreaks above established resistance often accelerate quickly; if the stock clears $43.09 on strong earnings, the next resistance may be materially higher, and those who waited for a better entry may have missed the move.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Enact Holdings is a high-quality specialty insurance franchise with exceptional margins and a consistent earnings beat record, but with only 1.8% headroom to near-term resistance, unfavorable risk/reward geometry, and 16% short interest, the current entry offers limited return potential.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.3 |
| ROA | 5.6 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 3.9 |
| FCF quality | 6.4 |
| Moat | 7.2 |
| Rule of 40 | 8.2 |
| Piotroski F | 8.9 |
- ▸Strong margins: 54%
- ▸Rule of 40: 49 (pass)
- ▸Strong Piotroski F-Score: 8/9
Growth
3.4/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.9 |
| EPS growth | 3.9 |
Momentum
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.0 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 1.5 |
- ▸Overbought (RSI 79)
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.2 |
| erm sentiment | 4.3 |
Insider
3.0/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 2.0 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Heavy insider selling — $50,648,947 (0.800% of mkt cap)
Peer rank
2.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.1 |
| quality rank | 6.9 |
| growth rank | 1.7 |
- ▸Best-in-class margins
Technical
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.7 |
| support resistance | 1.3 |
| 52w position | 9.7 |
Risk (lower is worse)
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 2.4 |
| days to cover | 0.0 |
| volatility | 7.3 |
| put call | 10.0 |
| implied vol | 2.0 |
| beta | 10.0 |
| debt equity | 9.4 |
- ▸High short interest: 15%
- ▸High IV: 68%
Catalyst
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.7 |
| dividend safety | 6.0 |
- ▸Perfect beat streak: 4Q
- ▸Dividend: 192.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:5.1>=4.5
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:26d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-1.2=NEGATIVE
- INSIDER:0.80%=HEAVY
Warning (1)
- MOMENTUM:5.1<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-1.20
Upside
-12.1%
Downside
10.1%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 26d with 4/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.1 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 7.5) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.2=NEGATIVE, INSIDER:0.80%=HEAVY) reinforce the read. Current asymmetry R:R is -1.20 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 7.5, Value at 7.1, and Catalyst at 6.1; the weakest are Peer rank at 2.7, Insider at 3.0, and Growth at 3.4. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -1.20 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Quality Margins Rule Of 40
Trip ifNet margin falls below 45% for 2 consecutive quarters.
- P2Consistent Earnings Beat Streak
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P3Elevated Short Interest Structural Overhang
Trip ifShort interest falls below 8% of float, removing the structural overhang.
- P4Limited Near Term Upside To Resistance
Trip ifAnalyst consensus price target rises above $48, restoring more than 10% upside from the current price of $42.34.