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NMI Holdings (NMIH) Up 0.7% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for NMI Holdings (NMIH - Free Report) . Shares have added about 0.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NMI Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
NMI Holdings Q2 Earnings & Revenues Top, Rise Y/Y
NMI Holdings reported second-quarter 2022 operating net income per share of 86 cents, which beat the Zacks Consensus Estimate by 11.7%. The bottom line increased 28.4% year over year.
The quarterly results reflected significant new business production and increasing persistency, which drove growth in the company’s high-quality insured portfolio. Favorable credit performance and expense discipline led to record profitability and strong returns.
Operational Update
NMI Holdings’ total operating revenues of $132.2 million increased 9.5% year over year on higher net premiums earned (up 9%) and net investment income (up 16.4%). Revenues beat the Zacks Consensus Estimate by 1.3%. Primary insurance-in-force increased 23% to $168.6 billion. Annual persistency was 71.5%, up 1760 basis points year over year.
New insurance written was $16.6 billion, down 27% year over year, reflecting a decline in refinancing origination volume year on year. Underwriting and operating expenses totaled $30.7 million, down 12% year over year. Insurance claims were a benefit of $3 million against an expense of $4.6 million.
The loss ratio was (2.5) against 4.2 in the year-ago quarter. The adjusted expense ratio of 25.4 improved 450 basis points year over year while the adjusted combined ratio of 22.9 improved 1100 basis points year over year.
Financial Update
Book value per share, a measure of net worth, was up 5.6% year over year to $18.01 as of Jun 30, 2022. NMI Holdings had $72.4 million in cash and cash equivalents, down 5.5% from 2021 end. The debt balance of $394.6 million increased 0.2% from 2021 end. Annualized adjusted return on equity was 19.4%, up 300 basis points.
Total PMIERs available assets were $2.2 billion and net risk-based required assets totaled $1.2 billion at second-quarter 2022 end.
Reinsurance Agreement Inked
NMIH entered into a $290 million excess of loss reinsurance agreement with a high-quality panel of third-party reinsurers, covering an existing portfolio of mortgage insurance policies written primarily from Oct 1, 2021 through Mar 31, 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, NMI Holdings has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise NMI Holdings has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
NMI Holdings belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, W.R. Berkley (WRB - Free Report) , has gained 4.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.
W.R. Berkley reported revenues of $2.68 billion in the last reported quarter, representing a year-over-year change of +24.1%. EPS of $1.12 for the same period compares with $0.78 a year ago.
For the current quarter, W.R. Berkley is expected to post earnings of $0.85 per share, indicating a change of -3.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +3.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for W.R. Berkley. Also, the stock has a VGM Score of C.
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NMI Holdings (NMIH) Up 0.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for NMI Holdings (NMIH - Free Report) . Shares have added about 0.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is NMI Holdings due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
NMI Holdings Q2 Earnings & Revenues Top, Rise Y/Y
NMI Holdings reported second-quarter 2022 operating net income per share of 86 cents, which beat the Zacks Consensus Estimate by 11.7%. The bottom line increased 28.4% year over year.
The quarterly results reflected significant new business production and increasing persistency, which drove growth in the company’s high-quality insured portfolio. Favorable credit performance and expense discipline led to record profitability and strong returns.
Operational Update
NMI Holdings’ total operating revenues of $132.2 million increased 9.5% year over year on higher net premiums earned (up 9%) and net investment income (up 16.4%). Revenues beat the Zacks Consensus Estimate by 1.3%. Primary insurance-in-force increased 23% to $168.6 billion. Annual persistency was 71.5%, up 1760 basis points year over year.
New insurance written was $16.6 billion, down 27% year over year, reflecting a decline in refinancing origination volume year on year. Underwriting and operating expenses totaled $30.7 million, down 12% year over year. Insurance claims were a benefit of $3 million against an expense of $4.6 million.
The loss ratio was (2.5) against 4.2 in the year-ago quarter. The adjusted expense ratio of 25.4 improved 450 basis points year over year while the adjusted combined ratio of 22.9 improved 1100 basis points year over year.
Financial Update
Book value per share, a measure of net worth, was up 5.6% year over year to $18.01 as of Jun 30, 2022. NMI Holdings had $72.4 million in cash and cash equivalents, down 5.5% from 2021 end. The debt balance of $394.6 million increased 0.2% from 2021 end. Annualized adjusted return on equity was 19.4%, up 300 basis points.
Total PMIERs available assets were $2.2 billion and net risk-based required assets totaled $1.2 billion at second-quarter 2022 end.
Reinsurance Agreement Inked
NMIH entered into a $290 million excess of loss reinsurance agreement with a high-quality panel of third-party reinsurers, covering an existing portfolio of mortgage insurance policies written primarily from Oct 1, 2021 through Mar 31, 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, NMI Holdings has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise NMI Holdings has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
NMI Holdings belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, W.R. Berkley (WRB - Free Report) , has gained 4.3% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.
W.R. Berkley reported revenues of $2.68 billion in the last reported quarter, representing a year-over-year change of +24.1%. EPS of $1.12 for the same period compares with $0.78 a year ago.
For the current quarter, W.R. Berkley is expected to post earnings of $0.85 per share, indicating a change of -3.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +3.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for W.R. Berkley. Also, the stock has a VGM Score of C.