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Should You Add NMI Holdings (NMIH) Stock for Better Returns?
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NMI Holdings (NMIH - Free Report) is set to grow on an improving mortgage insurance portfolio, higher new insurance written volume, a comprehensive reinsurance program, a solid capital position and effective capital deployment.
This Zacks Rank #2 (Buy) mortgage insurer has a decent history of delivering surprises in the last five quarters.
Also, it has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum. Back-tested results have shown that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 offer better returns.
An Outperformer
NMIH’s shares have rallied 14.7% year to date, outperforming the industry’s increase of 13.8% and the Finance sector’s increase of 5.3%. The increase in the stock price was in line with the S&P 500 composite’s rise in the said time frame.
Image Source: Zacks Investment Research
Northbound Estimate Revision
The Zacks Consensus Estimate for NMI Holdings’ 2024 and 2025 earnings has each moved 1 cent north in the last 30 days, reflecting analyst optimism.
Optimistic Growth Projection
The Zacks Consensus Estimate for NMI Holdings’ 2024 earnings is pegged at $4.25, which indicates a 10.7% increase from the year-ago reported figure of 11.1% higher revenues of $643.2 million. The consensus estimate for 2025 earnings is pegged at $4.57, which implies a 7.7% increase year over year on 6.1% higher revenues of $682.6 million.
The expected long-term growth rate is pegged at 6.9%. Notably, earnings grew 18.7% in the past five years, better than the industry average of 10.5%. NMI Holdings’ superior primary insurance in-force portfolio generates industry-leading growth.
Return on Capital
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 its shareholders’ funds. The company 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%, which reflected the insurer’s efficiency in utilizing funds to generate income.
Growth Drivers
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 long-term secular trends to drive improved new business opportunities in a strong private MI market. Thus, NMIH is poised to gain from new business opportunities.
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 company has a comprehensive reinsurance program for 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.
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
NMIH’s shares are trading at a price-to-book multiple of 1.38, 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 B, reflecting an attractive valuation.
HCI Group’s earnings surpassed estimates in each of the last four quarters, the average beat being 139.15%. In the past year, shares of HCI have gained 3.4%.
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 40.9%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings indicates 26% and 18% 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 lost 10.4%.
The Zacks Consensus Estimate for PRA’s 2024 and 2025 earnings implies 371.4% and 72.6% year-over-year growth, respectively.
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Should You Add NMI Holdings (NMIH) Stock for Better Returns?
NMI Holdings (NMIH - Free Report) is set to grow on an improving mortgage insurance portfolio, higher new insurance written volume, a comprehensive reinsurance program, a solid capital position and effective capital deployment.
This Zacks Rank #2 (Buy) mortgage insurer has a decent history of delivering surprises in the last five quarters.
Also, it has a VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum. Back-tested results have shown that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 offer better returns.
An Outperformer
NMIH’s shares have rallied 14.7% year to date, outperforming the industry’s increase of 13.8% and the Finance sector’s increase of 5.3%. The increase in the stock price was in line with the S&P 500 composite’s rise in the said time frame.
Image Source: Zacks Investment Research
Northbound Estimate Revision
The Zacks Consensus Estimate for NMI Holdings’ 2024 and 2025 earnings has each moved 1 cent north in the last 30 days, reflecting analyst optimism.
Optimistic Growth Projection
The Zacks Consensus Estimate for NMI Holdings’ 2024 earnings is pegged at $4.25, which indicates a 10.7% increase from the year-ago reported figure of 11.1% higher revenues of $643.2 million. The consensus estimate for 2025 earnings is pegged at $4.57, which implies a 7.7% increase year over year on 6.1% higher revenues of $682.6 million.
The expected long-term growth rate is pegged at 6.9%. Notably, earnings grew 18.7% in the past five years, better than the industry average of 10.5%. NMI Holdings’ superior primary insurance in-force portfolio generates industry-leading growth.
Return on Capital
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 its shareholders’ funds. The company 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%, which reflected the insurer’s efficiency in utilizing funds to generate income.
Growth Drivers
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 long-term secular trends to drive improved new business opportunities in a strong private MI market. Thus, NMIH is poised to gain from new business opportunities.
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 company has a comprehensive reinsurance program for 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.
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
NMIH’s shares are trading at a price-to-book multiple of 1.38, 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 B, 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 (PRA - Free Report) . Each stock presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
HCI Group’s earnings surpassed estimates in each of the last four quarters, the average beat being 139.15%. In the past year, shares of HCI have gained 3.4%.
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 40.9%.
The Zacks Consensus Estimate for PLMR’s 2024 and 2025 earnings indicates 26% and 18% 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 lost 10.4%.
The Zacks Consensus Estimate for PRA’s 2024 and 2025 earnings implies 371.4% and 72.6% year-over-year growth, respectively.