NMI Holdings (NMIH) AI Stock Analysis

429 Followers

Top Page

NMI Holdings

(NASDAQ:NMIH)

75Outperform

NMI Holdings is financially strong, with robust revenue growth and high profitability margins. Technical indicators suggest caution due to bearish trends, although valuation metrics indicate potential undervaluation. The positive sentiment from the earnings call reinforces confidence in the company's future performance, but the stock may face short-term pressure due to market trends.

Positive Factors

Credit Profile

NMIH has a more defensive credit profile than peers, which suggests the company should perform better than peers from a credit perspective in an economic slowdown.

Growth Potential

NMIH's book value has grown significantly over the past five years, highlighting strong growth in insured in-force (IIF) and high ROEs, with expectations of continued above-industry growth.

Valuation

The current valuation of NMIH creates a compelling entry point for investors due to its lower trading price compared to historical averages and peers.

Negative Factors

Economic Environment

NMIH could be an outsized beneficiary of higher refi activity as interest rates decline and borrowers refinance mortgages issued in 2023/24.

Market Competition

Management expects market share gains to continue to outpace the industry, which should lead to higher relative book value growth.

NMI Holdings (NMIH) vs. S&P 500 (SPY)

Market Cap

$2.60B

Dividend YieldN/A

Average Volume (3M)607.81K

Price to Earnings (P/E)7.7

Beta (1Y)0.58

Revenue Growth12.43%

EPS Growth15.32%

CountryUS

Employees230

SectorFinancial

Sector Strength86

IndustryInsurance - Specialty

Share Statistics

EPS (TTM)4.43

Shares Outstanding78,238,716

10 Day Avg. Volume708,507

30 Day Avg. Volume607,807

Financial Highlights & Ratios

PEG Ratio0.50

Price to Book (P/B)N/A

Price to Sales (P/S)4.25

Price to Cash Flow (P/CF)19.30

P/FCF Ratio19.30

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$42.83

Price Target Upside26.19% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering7

NMI Holdings Business Overview & Revenue Model

Company DescriptionNMI Holdings, Inc. (NMIH) operates as a provider of private mortgage insurance in the United States. The company offers products and services designed to protect mortgage lenders and investors from losses related to borrower defaults, thereby facilitating the sale of low down payment mortgages in the secondary mortgage market. NMIH primarily serves residential mortgage originators, including mortgage banks, commercial banks, and credit unions.

How the Company Makes MoneyNMI Holdings makes money by providing private mortgage insurance to lenders and investors. Its primary revenue stream is the collection of insurance premiums from mortgage lenders, which are paid for coverage against the risk of borrower defaults. The company's earnings are influenced by factors such as the volume of new insurance written, the credit quality of its insured portfolio, and prevailing interest rates. NMIH also benefits from partnerships with financial institutions that originate and service mortgages, allowing it to access a steady stream of new business.

NMI Holdings Financial Statement Overview

Summary

NMI Holdings showcases a robust financial profile with strong revenue growth, high profitability margins, and an improving balance sheet structure. The company effectively manages its cash flows, further strengthening its financial health. While the absence of long-term debt reduces financial risk, it may also limit growth opportunities through leverage. Overall, the company is well-positioned financially within the insurance industry, demonstrating resilience and growth potential.

Income Statement

Very Positive

NMI Holdings has demonstrated strong financial performance with consistent revenue growth, marked by a 12.42% increase from 2022 to 2023 and 12.41% from 2021 to 2022. The company maintains high gross and net profit margins, with a net profit margin of 55.30% in 2023. The absence of EBIT and EBITDA margins for 2024 is offset by historical data showing an EBIT margin of 99.65% in 2023, indicative of efficient operations. These factors contribute to a robust financial outlook.

Balance Sheet

Positive

The balance sheet reflects a solid financial structure with zero debt in 2024, which significantly improves the debt-to-equity ratio compared to previous years. The equity ratio has improved to 66.19% in 2024, up from 65.48% in 2023, suggesting strong equity backing. Return on equity is also strong at 16.24% in 2023, though slightly lower than previous years due to increased equity base. The overall stability is commendable, but the absence of debt may also indicate missed leverage opportunities.

Cash Flow

Positive

NMI Holdings exhibits strong cash flow management with a 18.10% growth in free cash flow from 2022 to 2023. The company maintains favorable ratios, such as a free cash flow to net income ratio of 1.02 in 2023, indicating efficient conversion of profits into cash. Operating cash flow has consistently exceeded net income, with a ratio of 1.07 in 2023, reinforcing sound operational efficiency. The cash flow stability and growth reflect a healthy financial position.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
650.97M	579.00M	524.46M	485.64M	436.19M
	Gross Profit
650.97M	579.00M	524.46M	485.64M	436.19M
	EBIT
32.77B	577.00M	398.39M	294.75M	214.82M
	EBITDA
0.00	456.46M	421.34M	339.75M	252.42M
	Net Income Common Stockholders
360.11M	322.11M	292.90M	231.13M	171.57M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
54.31M	333.29M	2.14B	2.16B	1.93B
	Total Assets
3.35B	2.94B	2.52B	2.45B	2.17B
	Total Debt
415.15M	397.60M	396.05M	394.62M	393.30M
	Net Debt
-54.31M	302.24M	353.80M	321.14M	271.92M
	Total Liabilities
1.13B	1.01B	902.30M	558.80M	505.89M
	Stockholders Equity
2.22B	1.93B	1.61B	1.57B	1.37B
Cash Flow		Free Cash Flow
393.60M	333.31M	302.82M	313.48M	240.44M
	Operating Cash Flow
393.60M	342.68M	313.39M	325.72M	252.60M
	Investing Cash Flow
-339.29M	-200.00M	-289.79M	-374.18M	-629.55M
	Financing Cash Flow
-96.70M	-90.42M	-55.83M	-1.83M	462.80M

NMI Holdings Technical Analysis

Technical Analysis Sentiment

Negative

Last Price33.94

Price Trends

50DMA

35.73

Negative

100DMA

36.75

Negative

200DMA

37.74

Negative

Market Momentum

MACD

0.08

Negative

RSI

58.54

Neutral

STOCH

64.44

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NMIH, the sentiment is Negative. The current price of 33.94 is below the 20-day moving average (MA) of 35.23, below the 50-day MA of 35.73, and below the 200-day MA of 37.74, indicating a bearish trend. The MACD of 0.08 indicates Negative momentum. The RSI at 58.54 is Neutral, neither overbought nor oversold. The STOCH value of 64.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NMIH.

NMI Holdings Risk Analysis

NMI Holdings disclosed 44 risk factors in its most recent earnings report. NMI Holdings reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

NMI Holdings Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACT	83 Outperform	$5.27B	7.98	14.29%	2.12%	4.17%	6.47%
ESNT	79 Outperform	$5.60B	7.92	13.63%	2.12%	11.88%	5.54%
MTG	77 Outperform	$5.63B	8.03	14.90%	2.17%	4.56%	15.94%
RDN	77 Outperform	$4.56B	8.24	13.40%	3.06%	3.79%	3.86%
NMIH	75 Outperform	$2.60B	7.66	17.38%	―	12.43%	15.32%
Sector *	64 Neutral	$13.21B	9.26	9.39%	4.87%	16.14%	-8.87%
AGO	63 Neutral	$3.99B	11.43	6.71%	1.59%	-4.43%	-45.42%

* Financial Sector Average

Performance Comparison

NMIH

NMI Holdings

33.94

4.30

14.51%

AGO

Assured Guaranty

80.79

3.16

4.07%

MTG

MGIC Investment

23.94

4.78

24.95%

RDN

Radian Group

32.40

3.47

11.99%

ESNT

Essent Group

54.93

2.71

5.19%

ACT

Enact Holdings

35.37

6.59

22.90%

NMI Holdings Earnings Call Summary

Earnings Call Date: Feb 6, 2025 | % Change Since: -12.53% | Next Earnings Date: Apr 29, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong financial performance, record insurance-in-force, and a positive regulatory environment. However, increased claims expenses and slight declines in persistency and expense management were noted. Overall, the positives significantly outweighed the negatives, showcasing a robust position and outlook for National MI.

Highlights

Record Insurance-in-Force and Financial Performance

National MI closed 2024 with a record $210.2 billion of high-quality, high-performing primary insurance-in-force and generated record adjusted net income of $365.6 million, up 13% compared to 2023.

Strong New Business and Customer Engagement

The company activated 118 new lenders in 2024, ending the year with over 1,600 active accounts and generating $11.9 billion of NIW volume in Q4, contributing to a total of $46 billion during the year.

Outstanding Credit Performance

The insurance portfolio is the fastest growing, highest quality, and best performing in the MI industry, helping a record number of borrowers gain access to housing.

Efficient Capital Management and Shareholder Returns

Completed a successful debt refinancing as an investment-grade issuer, returned capital through a repurchase program, and achieved a record full-year adjusted return on equity of 17.6%.

Positive Regulatory Environment and Market Conditions

Conversations with policymakers have been active and constructive, with bipartisan recognition of the private mortgage insurance industry’s role in expanding access to homeownership.

Lowlights

Increased Claims Expense

Claims expense in Q4 was $17.3 million compared to $10.3 million in Q3, influenced by new notices related to storm activity like Hurricanes Helene and Milton.

Persistency Decline

Twelve months' persistency was 84.6% in Q4, a slight decline from 85.5% in Q3.

Expense Management Challenges

Underwriting and operating expenses increased to $31.1 million in Q4 compared to $29.2 million in Q3, with an expense ratio of 21.7%.

Company Guidance

During the fourth quarter 2024 earnings call, National MI provided guidance reflecting a robust financial performance and strategic initiatives for 2025. The company reported $46 billion in new insurance written (NIW) volume for the year and $210.2 billion in primary insurance-in-force, with an adjusted net income of $365.6 million, a 13% increase from 2023, and an adjusted earnings per share (EPS) of $4.50, up 17% from the previous year. The adjusted return on equity was 17.6%. For the fourth quarter alone, revenue reached a record $166.5 million, with an adjusted net income of $86.1 million, or $1.07 per diluted share, and an adjusted return on equity of 15.6%. The company also maintained a strong capital position with $3.1 billion in total available assets under PMIERs and a default rate of 1%. Looking ahead, National MI plans to focus on customer service, value-added engagement, and technology leadership, while continuing to prioritize disciplined growth and risk management. They aim to compound book value, deliver mid-teens returns, and distribute excess capital prudently. The company also emphasized their ongoing commitment to shareholder value through a refreshed share repurchase program totaling $330 million.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.