Here's Why You Should Invest in NMI Holdings (NMIH) Stock Now
NMI Holdings Inc. NMIH has been benefitting from improved policy pricing, higher single-premium policy cancellations and flexible liquidity, which make it worth buying for one’s portfolio.
Zacks Rank & Price Performance
NMI Holdings currently carries a Zacks Rank #2 (Buy). In the year-to-date period, the stock has gained 22.8% compared with the industry’s growth of 5.9%.
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Return on Equity (ROE)
NMI Holdings’ ROE for the trailing 12 months of 18.8% was better than the industry average of 6.9%. The metric expanded 223 basis points year over year. This reflects NMIH’s efficiency in utilizing shareholders’ funds.
Rising Estimates
The Zacks Consensus Estimate for NMI Holdings’ 2023 earnings is pegged at $3.58 per share, indicating a 5.6% increase from the year-ago reported figure on 9.2% higher revenues of $571.4 million.
The consensus estimate for 2024 earnings is pegged at $3.93 per share, indicating a 9.6% increase from the year-ago reported figure on 9.2% higher revenues of $624.1 million.
NMI Holdings has a decent earnings surprise history. It beat estimates in three of the last four quarters and met once, with the average being 6%.
Business Tailwinds
NMI Holdings continues to benefit from new business production, robust growth in high-quality and short portfolios as well as continued success in the capital and reinsurance markets.
By virtue of resiliency and stability of the housing market, growth in total mortgage origination volume and increasing size of the U.S. mortgage insurance market, new insurance written (NIW), the primary driver of insurance-in-force (IIF) of National MI, is expected to improve. Also, continued expansion of customer franchise, and growth in monthly and single premium policy production tied to the rise in customer franchise and market presence are expected to drive NIW of NMIH.
NMI Holdings expects persistency to continue improving and driving further increases in the embedded portfolio value for the year. The company remains well-poised to gain from growth of IIF, increased policy pricing and higher single premium policy cancellations, which continue contributing to net premiums earned, one of the major determinants of revenue growth.
Net investment income is expected to improve as the company would roll over more maturities at favorable and higher rates.
NMI Holdings boasts a strong capital position and had total PMIERs available assets of $2.5 billion and net risk-based required assets of $1.2 billion at first-quarter end. NMIH purchased $14.8 million worth of common stock in the first quarter, which should instill confidence in investors.
NMIH has a favorable VGM Score of B.
The company’s rising reliance on debt may pose a threat to margins in the future. Nevertheless, we believe that a systematic and strategic plan of action will drive growth in the long term.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are HCI Group, Inc. HCI, Heritage Insurance Holdings, Inc. HRTG and RLI Corp. RLI, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group beat estimates in three of the last four quarters and missed once, the average beat being 308.8%.
The Zacks Consensus Estimate for HCI’s 2023 and 2024 earnings per share is pegged at $2.70 and $3.65, indicating year-over-year increases of 149.3% and 35.2%, respectively. In the year-to-date period, HCI has gained 48.4%.
Heritage Insurance Holdings’ beat estimates in three of the last four quarters and missed once, the average surprise being 230.3%.
The Zacks Consensus Estimate for HRTG’s 2023 and 2024 earnings per share is pegged at $0.64 and $0.83, suggesting year-over-year rises of 126.6% and 29.7%, respectively. In the year-to-date period, HRTG has surged 125.6%.
RLI Corp beat estimates in each of the last four quarters, the average being 43.5%. In the year-to-date period, RLI has improved 3.6%.
The Zacks Consensus Estimate for RLI’s 2023 and 2024 earnings per share is pegged at $5.06 and $5.25, implying year-over-year gains of 7.9% and 3.9%, respectively.
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RLI Corp. (RLI) : Free Stock Analysis Report
HCI Group, Inc. (HCI) : Free Stock Analysis Report
NMI Holdings Inc (NMIH) : Free Stock Analysis Report
Heritage Insurance Holdings, Inc. (HRTG) : Free Stock Analysis Report
