- If you are wondering whether Enova International at around US$134.11 is still offering value or already pricing in a lot of optimism, you are asking the right question for this stock.
- The share price has seen a 2.5% decline over the last 7 days and a 10.1% decline over the last 30 days, although the 1 year return sits at 44.8% and the 3 year return is 220.5%, with 5 year returns at 266.4%.
- Recent coverage of Enova International has focused on its position within the diversified financials space and how investors are reassessing companies in this part of the market. This helps frame those short term pullbacks against stronger multi year returns and provides useful context as we compare what the current price is implying against different estimates of value.
- On our framework, Enova International earns a valuation score of 3 out of 6. This reflects where it screens as undervalued on some checks but not others. The rest of this article will walk through those methods before finishing with a broader way to think about what fair value really means for this business.
Approach 1: Enova International Excess Returns Analysis
The Excess Returns model looks at how much profit a company is expected to generate above the return that shareholders require, then links that back to what might be a reasonable price per share.
For Enova International, the model uses a book value of $54.08 per share and a stable earnings figure of $7.30 per share, based on the median return on equity over the past 5 years. The average return on equity in that period is 16.87%. Against this, the estimated cost of equity is $4.60 per share, which implies an excess return of $2.71 per share. The model also references a stable book value of $43.31 per share, drawn from the median book value over the past 5 years.
Putting these inputs together, the Excess Returns model produces an estimated intrinsic value of about $80.88 per share. Compared with the current share price of around $134.11, this framework suggests the stock is 65.8% overvalued.
Result: OVERVALUED
Our Excess Returns analysis suggests Enova International may be overvalued by 65.8%. Discover 48 high quality undervalued stocks or create your own screener to find better value opportunities.
Approach 2: Enova International Price vs Earnings
For a profitable company like Enova International, the P/E ratio is a useful way to relate what you pay per share to the earnings the business is currently generating. It gives you a quick sense of how many dollars of price you are paying for each dollar of earnings.
What counts as a “normal” P/E depends on what investors expect for future growth and how much risk they see in those earnings. Higher expected growth or lower perceived risk can support a higher P/E, while slower expected growth or higher risk usually lines up with a lower P/E.
Enova International currently trades on a P/E of 10.88x. That is above the Consumer Finance industry average of about 7.79x, but below the broader peer group average of 17.20x. Simply Wall St’s Fair Ratio for Enova International is 16.14x. This is a proprietary estimate of the P/E that might be reasonable given factors such as the company’s earnings profile, industry, profit margins, market value and risk characteristics. Because it is tailored to Enova International rather than generic sector peers, the Fair Ratio can be more informative than a simple comparison to industry or peer averages. Comparing the current P/E of 10.88x with the 16.14x Fair Ratio, the shares appear undervalued on this metric.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Enova International Narrative
Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St you can use Narratives, which let you spell out your story for Enova International by tying your assumptions about future revenue, earnings, margins and a fair value to a clear forecast. You can then compare that Fair Value with the current price to help you decide whether you want to buy or sell, all within an easy tool on the Community page that automatically refreshes when new news or earnings arrive. One investor might build a Narrative that lines up with the higher US$180 fair value and a more optimistic outlook, while another might anchor closer to the lower US$111 view and a more cautious stance. You can see both side by side and decide which story you think is more realistic.
Do you think there's more to the story for Enova International? Head over to our Community to see what others are saying!
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.
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