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NMI Holdings (NMIH) Down 14.9% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for NMI Holdings (NMIH - Free Report) . Shares have lost about 14.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is NMI Holdings due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

NMI Holdings Q3 Earnings Top, Revenues Lag Estimates

NMI Holdings reported third-quarter 2021 operating net income per share of 71 cents, which beat the Zacks Consensus Estimate by 1.4%. The bottom line increased 51.1% year over year.

The quarterly results reflected growth in the insured portfolio and continued strength in credit performance.

Operational Update

NMI Holdings recorded total operating revenues of $124 million, which increased 14.8% year over year on higher net premiums earned (up 15%) and net investment income (up 17.9%). Revenues however missed the Zacks Consensus Estimate by 2.4%.

Primary insurance-in-force increased 37% to $143.6 billion.

New insurance written was $18.1 billion, down 2.2% year over year.

Annual persistency was 58.1%, down from 60% in the year-ago quarter.

Underwriting and operating expenses totaled $34.7 million, up 2% year over year. Insurance claims and claim expenses were $3.2 million, down 79.6%.

The loss ratio was 2.8, which improved 3050 basis points year over year. The expense ratio of 30.5 improved 390 basis points year over year while the combined ratio of 33.3 improved 1690 basis points year over year.

Financial Update

Book value per share, a measure of net worth, grew 15% year over year to $17.69 as of Sep 30, 2021.

NMI Holdings had $97.3 million in cash and cash equivalents, down 23.4% from 2020 end. The debt balance of $394.3 million increased 0.2% from 2020 end.

Annualized adjusted return on equity was 16.6%, up 400 basis points.

Total PMIERs available assets were $2 billion and net risk-based required assets totaled $1.4 billion at third-quarter 2021 end.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

At this time, NMI Holdings has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, 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 A. 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 this revision looks promising. Notably, NMI Holdings has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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