NMI Holdings Inc. NMIH has been favored by investors on the back of growing U.S. mortgage insurance market, higher single premium policy cancellations and flexible liquidity.
The Zacks Consensus Estimate for NMI Holdings’ 2022 earnings is pegged at $3.38, indicating a 23.8% increase from the year-ago reported figure on 8.9% higher revenues of $528.5 million.
The consensus estimate for 2023 earnings stands at $3.71, indicating a 9.6% increase from the year-ago reported figure on 13.7% higher revenues of $600.9 million.
Earnings Surprise History
NMI Holdings has a decent earnings surprise history. It beat estimates in each of the last four quarters, with the average being 6.38%.
Return on Equity (ROE)
NMI Holdings’ ROE for the trailing 12 months is 18.3%, better than the industry average of 6.7%. The metric expanded 260 basis points year over year. This reflects its efficiency in utilizing shareholders’ funds.
NMI Holdings has a favorable VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Riding on the broad resiliency 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 the mortgage insurer are expected to improve. Also, the continued expansion of customer franchise and growth in monthly and single premium policy production tied to the growth in customer franchise and market presence are expected to boost NIW of the insurer.
NMI Holdings expects mortgage insurance market conditions to remain favorable with strong NIW volume and equally constructive pricing and risk dynamics. The housing market is likely to remain solid with sustained demand and house price appreciation.
NMIH continues to witness favorable credit performance with an increasing number of impacted borrowers curing their delinquencies and the emergence of fewer new defaults. Value of new business production and encouraging credit performance in the in-force portfolio are likely to drive significant profitability and strong mid-teen returns for the insurer.
Higher IIF, increased monthly policy production and higher single premium policy cancellations should benefit the net premiums earned of the insurer, one of the key drivers of revenue growth.
Riding on lower refinancing activity and an increasing amount of the NIW volume, NMIH expects persistency to continue to trend higher through the end of 2022.
The insurer boasts a strong balance sheet with significant financial flexibility. NMIH has $400 million of outstanding senior notes as well as a $250 million revolving credit facility.
Given the solid capital position, in February 2022, the board of directors approved a $125 million share repurchase program through Dec 31, 2023. As of Sep 30, 2022, $73.8 million of repurchase authority remained available under the program.
Zacks Rank & Price Performance
NMI Holdings currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 7.9% compared with the industry’s increase of 14.5%.
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Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are W.R. Berkley Corporation WRB, Root, Inc. ROOT and Kinsale Capital Group, Inc. KNSL. While W.R. Berkley sports a Zacks Rank #1 (Strong Buy), Root and Kinsale Capital carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of W.R. Berkley surpassed estimates in each of the last four quarters, the average being 25.63%. In the past year, the insurer has gained 48.6%.
The Zacks Consensus Estimate for W.R. Berkley’s 2022 and 2023 earnings has moved 4.6% and 4.6% north, respectively, in the past 60 days.
Root delivered a trailing four-quarter average earnings surprise of 22.44%. In the past year, ROOT has lost 88.8%.
The Zacks Consensus Estimate for ROOT’s 2022 and 2023 earnings indicates a respective year-over-year increase of 44.8% and 23.8%.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average being 15.16%. In the past year, Kinsale Capital has gained 48%.
The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings implies a respective year-over-year rise of 27.5% and 21.9%.
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