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What Should Investors Know About NMI Holdings, Inc.’s (NASDAQ:NMIH) Earnings Trend?

Simply Wall St

In December 2018, NMI Holdings, Inc. (NASDAQ:NMIH) released its most recent earnings announcement, which suggested that the company experienced a substantial tailwind, more than doubling its earnings from the prior year. Below, I’ve laid out key growth figures on how market analysts perceive NMI Holdings’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

Check out our latest analysis for NMI Holdings

Analysts’ expectations for the coming year seems optimistic, with earnings growing by a robust 43%. This growth seems to continue into the following year with rates reaching double digit 81% compared to today’s earnings, and finally hitting US$238m by 2022.

NasdaqGM:NMIH Past and Future Earnings, March 1st 2019

Although it’s informative knowing the rate of growth each year relative to today’s figure, it may be more insightful determining the rate at which the company is rising or falling on average every year. The benefit of this approach is that we can get a bigger picture of the direction of NMI Holdings’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 25%. This means, we can assume NMI Holdings will grow its earnings by 25% every year for the next couple of years.

Next Steps:

For NMI Holdings, I’ve compiled three pertinent factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is NMIH worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether NMIH is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of NMIH? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.