NMI Holdings Inc. NMIH shares are trading at a discount compared to the Zacks Property and Casualty Insurance industry. Its forward price-to-book value of 1.3X is lower than the industry average of 1.56X, the Finance sector’s 4.16X and the Zacks S&P 500 Composite’s 8.2X. The property and casualty insurer has a Value Score of B.

The insurer has a market capitalization of $2.86 billion. The average volume of shares traded in the last three months was 0.4 million. The insurer has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 7.21%.

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Shares of The Travelers Companies, Inc. TRV and Cincinnati Financial Corporation CINF are trading at a multiple higher than the industry average, while Axis Capital Holdings Limited AXS shares are trading at a discount.

NMIH’s Price Performance

Shares of this property and casualty insurer have gained 23.7% in the past year, outperforming the Finance sector’s return of 22.3% and the S&P 500 composite’s appreciation of 17.1%. It, however, underperformed the industry’s growth of 25.7%.

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NMIH’s Growth Projection Encourages

The Zacks Consensus Estimate for NMI Holdings’ 2025 earnings per share indicates a year-over-year increase of 2.2%. The consensus estimate for revenues is pegged at $687.07 million, implying a year-over-year improvement of 5.5%. 

The consensus estimate for 2026 earnings per share and revenues indicates an increase of 9.1% and 3.9%, respectively, from the corresponding 2024 estimates. 

Notably, earnings grew 15.7% in the past five years. NMI Holdings’ superior primary insurance in-force portfolio generates industry-leading growth. 

NMI Holdings’ Favorable Return on Capital

Return on equity (ROE) for the trailing 12 months was 17.3%, which compared favorably with the industry’s 8.2%. This reflects its efficiency in utilizing shareholders’ funds.

Key Points to Note for NMIH

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, which includes both primary and secondary components. NMIH stands to gain from new business opportunities from a growing mortgage insurance market. NMI Holdings’ mortgage insurance portfolio is expected to create a strong foundation for future earnings.

Growth in monthly and single premium policy production is tied to the increased penetration of existing customer accounts. New customer account activation will also drive results. 

In order to enhance its return profile, absorb losses, provide efficient growth capital and mitigate the impact of credit volatility, NMI Holdings has a comprehensive reinsurance program for its in-force portfolio.

To drive margin expansion, NMIH remains focused on efficiency and expense management. NMI Holdings engages in share buybacks and through year-end, NMIH has repurchased a total of $245 million of shares. NMIH has $80 million of repurchase capacity remaining under the existing program.

All these together should help the insurer continue to generate solid mid-teens shareholders’ returns.

Conclusion

NMI Holdings is well-poised for growth on new primary insurance written, direct primary insurance in force and a comprehensive reinsurance program. 

NMIH should also benefit from a higher return on capital, favorable growth estimates, as well as the affordability of shares. It is, therefore, wise to hold on to this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report

Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

Axis Capital Holdings Limited (AXS) : Free Stock Analysis Report

NMI Holdings Inc (NMIH) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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