Shares of NMI Holdings Inc. NMIH have gained 35.1% year to date, outperforming the industry's growth of 14.5%. The Zacks S&P 500 composite has increased 17% in the said time frame. With a market capitalization of $2.32 billion, the average volume of shares traded in the last three months was 0.4 million.
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The rally was largely driven by new business production, higher single premium policy cancellations, growth in total mortgage origination volume and a strong capital position.
NMI Holdings has a solid track record of beating earnings estimates in each of the last four quarters, the average being 5.32%.
The Zacks Consensus Estimate for 2023 and 2024 earnings has moved 2.8% and 0.5% north, respectively, in the past 60 days, reflecting analysts’ optimism on the stock.
Will the Bull Run Continue?
The Zacks Consensus Estimate for NMI Holdings’ 2023 earnings is pegged at $3.68 per share, indicating an 8.5% increase from the year-ago reported figure on 9.4% higher revenues of $572.81 million. The consensus estimate for 2024 earnings is pegged at $3.94 per share, indicating a 6.9% increase from the year-ago reported figure on 7.4% higher revenues of $615.24 million.
NMI Holdings’ return on equity for the trailing 12 months is 18.5%, better than the industry average of 6.7%. The metric expanded 110 basis points year over year. This reflects its efficiency in utilizing shareholders’ funds.
This Zacks Rank #3 (Hold) insurer 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, the 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. NMIH 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 $1.3 billion at second-quarter end. Year to date, NMIH has repurchased shares for $41.1 million. Currently, it has $27.7 million remaining under authorization.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Arch Capital Group Ltd. ACGL, Axis Capital Holdings Limited AXS and Cincinnati Financial Corporation CINF. While Arch Capital and Axis Capital sport a Zacks Rank #1 (Strong Buy) each, Cincinnati Financial carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital has a decent history of delivering earnings surprises in each of the last four quarters, the average being 26.83%. Year to date, ACGL has rallied 29.5%.
The Zacks Consensus Estimate for ACGL’s 2023 and 2024 earnings has moved 7.6% and 6.5% north, respectively, in the past 60 days, reflecting analysts’ optimism.
Axis Capital has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 9.75%. Year to date, AXS has gained 6.8%.
The Zacks Consensus Estimate for AXS’ 2023 and 2024 earnings per share is pegged at $8.41 and $9.31, indicating a year-over-year increase of 44.7% and 10.7%, respectively.
Cincinnati Financial has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 25.25%. Year to date, CINF has gained 6.9%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share is pegged at $5 and $5.88, indicating a year-over-year increase of 17.9% and 17.6%, respectively.
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