NMI Holdings (NMIH) Stock Rises 35.2% YTD: More Room to Run?
Shares of NMI Holdings Inc. NMIH have gained 35.2% year to date (YTD), outperforming the industry's rise of 11.4%. The Finance sector and the Zacks S&P 500 composite have risen 6.9% and 18.5%, respectively, in the same period. With a market capitalization of $2.25 billion, the average volume of shares traded in the last three months was 0.5 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 4.48%.
The Zacks Consensus Estimate for 2023 and 2024 earnings has moved 1.3% and 1% north, respectively, in the past 30 days, reflecting analysts’ optimism on the stock.
Will the Bull Run Continue?
The Zacks Consensus Estimate for NMI Holdings’ 2023 earnings is pegged at $3.76 per share, indicating a 10.9% increase from the year-ago reported figure on 10% higher revenues of $575.79 million. The consensus estimate for 2024 earnings is pegged at $4.02 per share, indicating a 6.9% increase from the year-ago reported figure on 7.3% higher revenues of $617.94 million.
NMI Holdings’ return on equity for the trailing 12 months is 18.2%, better than the industry average of 7.1%. This reflects its efficiency in utilizing shareholders’ funds.
NMIH has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum. Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy), offer the best opportunities in the value investing space.
This Zacks Rank #2 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 the 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 a rise 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 $2.6 billion and net risk-based required assets of $1.4 billion at third-quarter end. YTD, NMIH has repurchased shares for $60.5 million. Currently, the insurer has $208.5 million remaining under authorization.
NMIH shares are trading at a discount than the industry average. Its price-to-book value of 1.27X is lower than the industry average of 1.44X. Before the valuation expands, it is preferable to take a position in the stock. NMI Holdings has an impressive Value Score of B, reflecting an attractive valuation of the stock. Value stocks have a long history of showing superior returns.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Mercury General Corporation MCY, Kinsale Capital Group, Inc. KNSL and Cincinnati Financial Corporation CINF. While Mercury General sports a Zacks Rank #1, Kinsale Capital and Cincinnati Financial carry a Zacks Rank #2 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mercury General beat estimates in two of the last four quarters and missed in the other two, the average being 2,833.05%. In the past year, the insurer has lost 1.8%.
The Zacks Consensus Estimate for MCY’s 2023 and 2024 earnings per share indicates a year-over-year increase of 65.2% and 343.7%, respectively.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 14.25%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings has moved 2.7% and 1.7% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Cincinnati Financial surpassed earnings in three of the last four quarters and missed in one, the average being 38.33%. In the past year, the insurer has lost 1.6%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share indicates a year-over-year increase of 31.8% and 8.1%, respectively.
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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
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NMI Holdings Inc (NMIH) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
