We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
NMI Holdings (NMIH) Gains 31% in a Year: More Room for Growth?
Read MoreHide Full Article
NMI Holdings (NMIH - Free Report) shares have rallied 30.6% in a year, outperforming the industry’s increase of 26.5%, the Finance sector’s increase of 24.8% and the S&P 500 composite’s rise of 26%. With a market capitalization of $2.6 billion, the average volume of shares traded in the last three months was 0.5 million.
Improving mortgage insurance portfolio, higher new insurance written volume, a comprehensive reinsurance program, a solid capital position and effective capital deployment continue to drive this Zacks Rank #2 (Buy) life insurer. NMIH delivered an earnings surprise in the last five quarters. Its earnings grew 18.7% in the last five years, better than the industry average of 10.5%
NMIH’s return on equity (ROE) for the trailing 12 months is 18.1%, better than the industry average of 7.8%. This reflects efficiency in utilizing shareholders’ funds. It targets 13% ROE over the medium term. Also, the return on invested capital in the trailing 12 months was 14.5%, better than the industry average of 5.9%, reflecting the insurer’s efficiency in utilizing funds to generate income. It has a VGM Score of A.
Image Source: Zacks Investment Research
Can the Stock Retain the Bull Run?
The Zacks Consensus Estimate for NMI Holdings’ 2024 earnings is pegged at $4.24, indicating a 10.4% increase from the year-ago reported figure on 10.5% higher revenues of $639.9 million. The consensus estimate for 2025 earnings is pegged at $4.56, indicating a 7.6% increase year over year on 5.9% higher revenues of $677.3 million.
The expected long-term growth rate is pegged at 6.9%. It has a Growth Score of B. NMI Holdings’ superior primary insurance in-force (IIF) portfolio generates industry-leading growth.
Per the Federal Reserve, the U.S. residential mortgage market is one of the largest in the world, with nearly $13 trillion of mortgage debt outstanding as of Dec 31, 2023, and includes both primary and secondary components. NMIH expects the private MI market to remain strong in 2024, where long-term secular trends should continue to drive improved new business opportunities. A strong mortgage origination market and increased private mortgage insurance penetration rates should benefit NMIH.
Growth in monthly and single premium policy production tied to the increased penetration of existing customer accounts and new customer account activations, as well as growth in the size of the total mortgage insurance market, will boost results. The mortgage insurer noted that increasing interest rates would affect refinancing activity but purchase origination volume should remain strong.
This mortgage insurer has a comprehensive reinsurance program in place for nearly the entirety of its in-force portfolio. This enhances its return profile, absorbs loss, provides efficient growth capital and mitigates the impact of credit volatility.
The insurer remains focused on efficiency and expense management, driving improved margins.
As part of wealth distribution to its shareholders, NMIH engages in share buybacks and has a $151.8 million share repurchase program under its kitty.
All these together should help the insurer continue to generate solid mid-teens shareholders’ returns.
Attractive Valuation
Shares are trading at a price-to-book multiple of 1.33, lower than the industry average of 1.5. Before valuation expands, it is wise to take a position in the stock.
This insurer has a Value Score of A, reflecting an attractive valuation.
HCI Group earnings surpassed estimates in each of the last four quarters, the average beat being 139.15%. In the past year, HCI has rallied 84.5%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies 57.6% and 4.3% year-over-year growth, respectively.
Palomar’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 15.10%. In the past year, PLMR’s stock has surged 55.5%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings indicates 25.8% and 16.1% year-over-year growth, respectively.
ProAssurance earnings surpassed estimates in two of the last four quarters and missed in the other two. In the past year, PRA’s stock has surged 19.7%.
The Zacks Consensus Estimate for PRA’s 2024 and 2025 earnings suggests 371.4% and 71.6% year-over-year growth, respectively.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
NMI Holdings (NMIH) Gains 31% in a Year: More Room for Growth?
NMI Holdings (NMIH - Free Report) shares have rallied 30.6% in a year, outperforming the industry’s increase of 26.5%, the Finance sector’s increase of 24.8% and the S&P 500 composite’s rise of 26%. With a market capitalization of $2.6 billion, the average volume of shares traded in the last three months was 0.5 million.
Improving mortgage insurance portfolio, higher new insurance written volume, a comprehensive reinsurance program, a solid capital position and effective capital deployment continue to drive this Zacks Rank #2 (Buy) life insurer. NMIH delivered an earnings surprise in the last five quarters. Its earnings grew 18.7% in the last five years, better than the industry average of 10.5%
NMIH’s return on equity (ROE) for the trailing 12 months is 18.1%, better than the industry average of 7.8%. This reflects efficiency in utilizing shareholders’ funds. It targets 13% ROE over the medium term. Also, the return on invested capital in the trailing 12 months was 14.5%, better than the industry average of 5.9%, reflecting the insurer’s efficiency in utilizing funds to generate income. It has a VGM Score of A.
Image Source: Zacks Investment Research
Can the Stock Retain the Bull Run?
The Zacks Consensus Estimate for NMI Holdings’ 2024 earnings is pegged at $4.24, indicating a 10.4% increase from the year-ago reported figure on 10.5% higher revenues of $639.9 million. The consensus estimate for 2025 earnings is pegged at $4.56, indicating a 7.6% increase year over year on 5.9% higher revenues of $677.3 million.
The expected long-term growth rate is pegged at 6.9%. It has a Growth Score of B. NMI Holdings’ superior primary insurance in-force (IIF) portfolio generates industry-leading growth.
Per the Federal Reserve, the U.S. residential mortgage market is one of the largest in the world, with nearly $13 trillion of mortgage debt outstanding as of Dec 31, 2023, and includes both primary and secondary components. NMIH expects the private MI market to remain strong in 2024, where long-term secular trends should continue to drive improved new business opportunities. A strong mortgage origination market and increased private mortgage insurance penetration rates should benefit NMIH.
Growth in monthly and single premium policy production tied to the increased penetration of existing customer accounts and new customer account activations, as well as growth in the size of the total mortgage insurance market, will boost results. The mortgage insurer noted that increasing interest rates would affect refinancing activity but purchase origination volume should remain strong.
This mortgage insurer has a comprehensive reinsurance program in place for nearly the entirety of its in-force portfolio. This enhances its return profile, absorbs loss, provides efficient growth capital and mitigates the impact of credit volatility.
The insurer remains focused on efficiency and expense management, driving improved margins.
As part of wealth distribution to its shareholders, NMIH engages in share buybacks and has a $151.8 million share repurchase program under its kitty.
All these together should help the insurer continue to generate solid mid-teens shareholders’ returns.
Attractive Valuation
Shares are trading at a price-to-book multiple of 1.33, lower than the industry average of 1.5. Before valuation expands, it is wise to take a position in the stock.
This insurer has a Value Score of A, reflecting an attractive valuation.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are HCI Group, Inc. (HCI - Free Report) , Palomar Holdings (PLMR - Free Report) and ProAssurance Corporation (PRA - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group earnings surpassed estimates in each of the last four quarters, the average beat being 139.15%. In the past year, HCI has rallied 84.5%.
The Zacks Consensus Estimate for HCI’s 2024 and 2025 earnings implies 57.6% and 4.3% year-over-year growth, respectively.
Palomar’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 15.10%. In the past year, PLMR’s stock has surged 55.5%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings indicates 25.8% and 16.1% year-over-year growth, respectively.
ProAssurance earnings surpassed estimates in two of the last four quarters and missed in the other two. In the past year, PRA’s stock has surged 19.7%.
The Zacks Consensus Estimate for PRA’s 2024 and 2025 earnings suggests 371.4% and 71.6% year-over-year growth, respectively.