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Why Should You Add NMI Holdings (NMIH) to Your Portfolio?
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NMI Holdings’ (NMIH - Free Report) improving mortgage insurance portfolio, higher new insurance written volume, a comprehensive reinsurance program, solid capital position, effective capital deployment along with favorable growth estimates make it worth adding in one’s portfolio.
NMIH has a solid track record of beating earnings estimates in the last 20 quarters. It has a VGM Score of B.
Zacks Rank & Price Performance
NMI Holdings currently carries a Zacks Rank #2 (Buy). Year to date, the stock has gained 4.6%, outperforming the industry’s increase of 2.4%.
Image Source: Zacks Investment Research
Growth Projections
The Zacks Consensus Estimate for NMI Holdings’ 2022 earnings is pegged at $3.33, indicating a 22% increase from the year-ago reported figure on 9.3% higher revenues of $530.4 million. The consensus estimate for 2023 earnings is pegged at $3.76, indicating a 12.9% increase from the year-ago reported figure on 8.9% higher revenues of $577.5 million.
Return on Equity (ROE)
Return on equity was 17.4% in the trailing twelve months, better than the industry average of 5.7%.
Growth in monthly and single premium policy and growth in the size of the total mortgage insurance market makes NMI Holdings well poised for growth. The mortgage insurer noted that increasing interest rates would impact refinancing activity but purchase origination volume should remain strong.
A strong mortgage origination market and increased private mortgage insurance penetration rates should benefit NMIH. The insurer anticipates the housing market to remain strong with continued demand, appreciation in house price, favorable mortgage insurance market, better pricing and solid new insurance written volume.
The insurer noted that new business opportunity has been fueling Private MI Industry IIF growth. Total Private MI industry IIF is estimated to grow to $2 trillion by 2024. NIW is expected to grow $500-600 billion annually to $2.9 trillion by 2024, driven by millennial demand, fueled by increased access and affordability among others.
NMI Holdings has a comprehensive reinsurance program in place for the entirety of the in-force portfolio. This, in turn, 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.
Also, NMIH has a $125 million worth share buyback program, effective through Dec 31, 2023 under its kitty.
All these together should help the insurer continue to generate solid mid-teens shareholders’ returns.
Attractive Valuation
The stock is currently trading at a price-to-book value multiple of 1.27, lower than the industry average of 1.43. Before valuation expands, one should likely take a position in the stock. Also, it has a Value Score of A. This style score helps find the most attractive value stocks that have a long history of superior returns.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 29.95%. Year to date, W.R. Berkley stock has gained 23.9%.
The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings per share indicates year-over-year increases of 50.6% and 10.4%, respectively.
Arch Capital’s earnings surpassed estimates in three of the last four quarters and missed in one, the average beat being 33.64%. Year to date, ACGL has gained 6.9%.
The Zacks Consensus Estimate for ACGL’s 2022 and 2023 earnings implies a 29.6% and 14.8% year-over-year increase, respectively.
The bottom line of ProAssurance surpassed earnings estimates in three of the last four quarters and missed in one, the average beat being 150.9%. Year to date, the insurer has lost 8.8%.
The Zacks Consensus Estimate for ProAssurance’s 2022 and 2023 earnings has moved 16.9% and 13.9% north, respectively, in the past seven days.
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Why Should You Add NMI Holdings (NMIH) to Your Portfolio?
NMI Holdings’ (NMIH - Free Report) improving mortgage insurance portfolio, higher new insurance written volume, a comprehensive reinsurance program, solid capital position, effective capital deployment along with favorable growth estimates make it worth adding in one’s portfolio.
NMIH has a solid track record of beating earnings estimates in the last 20 quarters. It has a VGM Score of B.
Zacks Rank & Price Performance
NMI Holdings currently carries a Zacks Rank #2 (Buy). Year to date, the stock has gained 4.6%, outperforming the industry’s increase of 2.4%.
Image Source: Zacks Investment Research
Growth Projections
The Zacks Consensus Estimate for NMI Holdings’ 2022 earnings is pegged at $3.33, indicating a 22% increase from the year-ago reported figure on 9.3% higher revenues of $530.4 million. The consensus estimate for 2023 earnings is pegged at $3.76, indicating a 12.9% increase from the year-ago reported figure on 8.9% higher revenues of $577.5 million.
Return on Equity (ROE)
Return on equity was 17.4% in the trailing twelve months, better than the industry average of 5.7%.
Business Tailwinds
NMI Holdings superior primary insurance in-force (IIF) portfolio generates industry-leading growth.
Growth in monthly and single premium policy and growth in the size of the total mortgage insurance market makes NMI Holdings well poised for growth. The mortgage insurer noted that increasing interest rates would impact refinancing activity but purchase origination volume should remain strong.
A strong mortgage origination market and increased private mortgage insurance penetration rates should benefit NMIH. The insurer anticipates the housing market to remain strong with continued demand, appreciation in house price, favorable mortgage insurance market, better pricing and solid new insurance written volume.
The insurer noted that new business opportunity has been fueling Private MI Industry IIF growth. Total Private MI industry IIF is estimated to grow to $2 trillion by 2024. NIW is expected to grow $500-600 billion annually to $2.9 trillion by 2024, driven by millennial demand, fueled by increased access and affordability among others.
NMI Holdings has a comprehensive reinsurance program in place for the entirety of the in-force portfolio. This, in turn, 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.
Also, NMIH has a $125 million worth share buyback program, effective through Dec 31, 2023 under its kitty.
All these together should help the insurer continue to generate solid mid-teens shareholders’ returns.
Attractive Valuation
The stock is currently trading at a price-to-book value multiple of 1.27, lower than the industry average of 1.43. Before valuation expands, one should likely take a position in the stock. Also, it has a Value Score of A. This style score helps find the most attractive value stocks that have a long history of superior returns.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are W.R. Berkley Corporation (WRB - Free Report) , Arch Capital Group (ACGL - 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.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 29.95%. Year to date, W.R. Berkley stock has gained 23.9%.
The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings per share indicates year-over-year increases of 50.6% and 10.4%, respectively.
Arch Capital’s earnings surpassed estimates in three of the last four quarters and missed in one, the average beat being 33.64%. Year to date, ACGL has gained 6.9%.
The Zacks Consensus Estimate for ACGL’s 2022 and 2023 earnings implies a 29.6% and 14.8% year-over-year increase, respectively.
The bottom line of ProAssurance surpassed earnings estimates in three of the last four quarters and missed in one, the average beat being 150.9%. Year to date, the insurer has lost 8.8%.
The Zacks Consensus Estimate for ProAssurance’s 2022 and 2023 earnings has moved 16.9% and 13.9% north, respectively, in the past seven days.