If you are wondering whether Enova International at around US$149 per share is still offering value after a strong run, this article will walk you through what the numbers are really saying about the stock.
The share price has pulled back recently, with a 7.4% decline over the past week and a 4.9% decline over the past month, although the 1 year return of 34.6% and 3 year return of 195.9% put that near term weakness in a different light.
Recent coverage of Enova International has focused on its position in diversified financials and changing market sentiment around higher growth, higher risk lenders. This helps explain some of the short term volatility and matters because investors may be reassessing both the risk profile and what they are willing to pay for that exposure.
On our valuation checks, Enova International scores 3 out of 6, and you can see the detailed breakdown of that score here. We will unpack this using different valuation approaches before finishing with an even more practical way to think about what the stock is worth.
The Excess Returns model looks at how much profit a company generates over and above the return that equity investors are assumed to require, then capitalizes those extra profits into an estimated value per share.
For Enova International, the model uses a Book Value of $54.08 per share and a Stable EPS of $7.30 per share, based on the median return on equity from the past 5 years. The implied Cost of Equity is $4.50 per share, which leads to an Excess Return of $2.80 per share. That excess is tied to an Average Return on Equity of 16.87%, applied to a Stable Book Value of $43.31 per share, sourced from the median book value over the same period.
When these inputs are aggregated, the Excess Returns model arrives at an estimated intrinsic value of about $83.44 per share. At a current share price around $149, this comparison suggests the stock is 78.7% overvalued under this approach.
For a profitable company like Enova International, the P/E ratio is a useful shorthand for how much investors are currently paying for each dollar of earnings. It is simple, widely used and directly links the share price to the underlying earnings power of the business.
What counts as a typical or fair P/E ratio depends on what investors expect from a company, including its earnings growth, profitability and perceived risk. Higher growth or lower risk can support a higher multiple, while slower growth or higher risk usually justifies a lower one.
Enova International currently trades on a P/E of 11.95x. That is above the Consumer Finance industry average of 8.05x but below the peer group average of 19.86x. Simply Wall St’s Fair Ratio for Enova International is 16.96x, which is a proprietary estimate of what the P/E might be given factors such as the company’s earnings profile, margin structure, industry, market capitalization and risk characteristics. This Fair Ratio can be more informative than a simple peer or industry comparison because it adjusts for these company specific inputs rather than assuming all firms should trade on the same baseline multiple.
Comparing the current P/E of 11.95x with the Fair Ratio of 16.96x suggests the shares are trading below that fair range on this metric.
Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St’s Community page you can use Narratives. You set out your story for Enova International, link that story to your own forecast for revenue, earnings and margins, and then see a Fair Value that you can compare to the current share price. This can help you decide when you might want to buy or sell, with the Fair Value updating as new news or earnings arrive. For example, one investor on the platform currently has a higher fair value estimate of about US$193.71 per share for Enova International, while another might take a more cautious view closer to the lower analyst target of US$111. These reflect two very different Narratives built from the same public information.
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.
