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Why You Should Hold NMI Holdings (NMIH) Stock in Portfolio

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NMI Holdings’ (NMIH - Free Report) growth on new primary insurance written, direct primary insurance in force and an improving risk-based capital ratio make its worthy of retention in one’s portfolio.

Growth Projections

The Zacks Consensus Estimate for 2021 earnings is pegged at $2.28, up 4.1% on 17.7% higher revenues of $510.2 million. The consensus estimate for 2022 earnings is pegged at $2.86, up 25.4% on 21.4% higher revenues of $619.3 million.

Return on Equity (ROE)

The company’s ROE for the trailing 12 months is 14.2%, better than the industry average of 5.6%, reflecting the company’s efficiency in utilizing shareholders’ fund.  The company aims to generate solid mid-teens returns for its shareholders.

Estimate Revision

The Zacks Consensus Estimate for 2021 and 2022 moved 5.1% and 3.6% north in the past 30 days, reflecting analyst optimism.

Style Score

The company is well poised for progress, as is evident from its favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors.

Earnings Surprise History

NMI Holdings surpassed estimates in each of the last four reported quarters, with the average beat being 20.29%.

Zacks Rank & Price Performance

NMI Holdings currently carries a Zacks Rank #3 (Hold). In the past six months, the stock has rallied 29.6%, outperforming the industry’s increase of 17.2%.

Business Tailwinds

The mortgage insurer is poised to benefit from strength of the purchase mortgage market and the refinance market, resulting in new business opportunity. Strong mortgage origination market and increased private mortgage insurance penetration rates thus should aid its performance.

NMI Holdings is well poised to capitalize on the opportunity offered by one of the largest residential mortgage markets in the world. Its strong mortgage insurance portfolio is expected to create a strong foundation for future earnings.

The company has a comprehensive reinsurance program in place on nearly entirety of in-force portfolio. Thus, it enhances return profile, absorbs loss, provides efficient growth capital and mitigates impact of credit volatility. This apart, it uses individual risk underwriting and granular Rate GPS pricing to target a higher quality mix of business.

Stocks to Consider

Some better-ranked stocks from the same industry are Markel (MKL - Free Report) , CNA Financial (CNA - Free Report) and Alleghany (Y - Free Report) .

Markel delivered an earnings surprise of 75.11% in the last reported quarter. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CNA Financial delivered an earnings surprise of 16.04% in the last reported quarter. It carries a Zacks Rank #2 (Buy).

Alleghany delivered an earnings surprise of 48.79% in the last reported quarter. It carries a Zacks Rank #2.

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