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Should You Retain NMI Holdings (NMIH) Stock in Your Portfolio?

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NMI Holdings Inc. NMIH has been favored by investors, given its growth in total mortgage origination volume, new business production and higher single premium policy cancellations

Growth Projections

The Zacks Consensus Estimate for NMI Holdings’ 2022 earnings is pegged at $3.20, indicating a 17.2% increase from the year-ago reported figure on 9.1% higher revenues of $529.2 million.

The consensus estimate for 2023 earnings stands at $3.67, indicating a 14.5% increase from the year-ago reported figure on 7.4% higher revenues of $568.3 million.

Earnings Surprise History

NMI Holdings has a decent earnings surprise history. This insurer has a solid track record of beating earnings estimates in the last six quarters.

Return on Equity (ROE)

NMI Holdings’ ROE for the trailing 12 months is 16.5%, better than the industry average of 5.9%. The metric expanded 340 basis points year over year. This reflects its efficiency in utilizing shareholders’ funds.

Style Score

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.

Business Tailwinds

National MI continued to deliver significant 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 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 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 growth in customer franchise and market presence are expected to drive NIW of NMIH.

NMI Holdings expects persistency to continue to improve and drive further increases in the embedded portfolio value for the remainder of the year.

NMI Holdings remains well poised to gain from the growth of IIF, increased monthly policy production and higher single premium policy cancellations, which continue to contribute to net premiums earned, one of the key drivers of revenue growth.
Net investment income is expected to improve with growth in the size of the total investment portfolio and an increase in book yield.

NMIH boasts a solid balance sheet with a robust funding position and a sizable regulatory capital buffer.

Reinsurance provides protection against losses and is an efficient source of growth capital. NMIH entered into a $290 million excess of loss reinsurance agreement with a broad panel of highly rated reinsurers that will boost the excess position and provide better funding in the long run.

National MI remains well-poised to continue delivering strong mid-teens returns and compounded book value-per-share growth for shareholders. NMI Holdings had $120 million of repurchase capacity remaining under the program declared in February.

Zacks Rank

NMI Holdings currently carries a Zacks Rank #3 (Hold).
In the past year, the stock has lost 25.4% compared with the industry’s decline of 7.4%.

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Zacks Investment Research


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Stocks to Consider

Some better-ranked stocks in the insurance industry are HCI Group, Inc. HCI, American Financial Group, Inc. AFG and United Fire Group, Inc. UFCS. While HCI Group and American Financial sport a Zacks Rank #1 (Strong Buy), United Fire Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 60 days. In the past year, HCI Group’s stock has lost 29.9%.

The Zacks Consensus Estimate for HCI’s 2022 and 2023 earnings per share indicates a year-over-year increase of 280.9% and 75%, respectively.

American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has gained 12.7%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 60 days.

United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 270.8%. In the past year, UFCS 's stock has increased 24.8%.

The Zacks Consensus Estimate for UFCS’ 2022 earnings has moved 23.5% north in the past 60 days.


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