NMI Holdings (NMIH) AI Stock Analysis

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NMI Holdings

(NASDAQ:NMIH)

Rating:78Outperform

Price Target:―

NMI Holdings scores a strong 77.8, driven by its robust financial performance and positive earnings call. The company's strategic growth, high profitability, and efficient capital management are key strengths. Valuation metrics suggest the stock may be undervalued, although the lack of a dividend yield could be a drawback. Technical analysis indicates a neutral trend, which tempers the overall score slightly. Overall, NMI Holdings is well-positioned within the insurance industry, with substantial growth and resilience potential.

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. SPDR S&P 500 ETF (SPY)

Market Cap

$2.97B

Dividend YieldN/A

Average Volume (3M)752.62K

Price to Earnings (P/E)8.2

Beta (1Y)0.57

Revenue Growth11.61%

EPS Growth14.35%

CountryUS

Employees230

SectorFinancial

Sector Strength82

IndustryInsurance - Specialty

Share Statistics

EPS (TTM)1.28

Shares Outstanding78,122,940

10 Day Avg. Volume555,804

30 Day Avg. Volume752,619

Financial Highlights & Ratios

PEG Ratio1.71

Price to Book (P/B)1.28

Price to Sales (P/S)0.00

P/FCF Ratio7.74

Enterprise Value/Market Cap0.97

Enterprise Value/Revenue1.12

Enterprise Value/Gross Profit4.32

Enterprise Value/Ebitda1.59

Forecast

1Y Price Target

$41.60

Price Target Upside9.59% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

NMI Holdings Business Overview & Revenue Model

Company DescriptionNMI Holdings, Inc. provides private mortgage guaranty insurance services in the United States. The company offers mortgage insurance services; and outsourced loan review services to mortgage loan originators. It serves national and regional mortgage banks, money center banks, credit unions, community banks, builder-owned mortgage lenders, internet-sourced lenders, and other non-bank lenders. NMI Holdings, Inc. was incorporated in 2011 and is headquartered in Emeryville, California.

How the Company Makes MoneyNMI Holdings makes money primarily through the premiums it earns on its mortgage insurance policies. These premiums are paid by borrowers, usually on a monthly basis, as part of their mortgage agreements. The company's revenue model is driven by the volume of new insurance written and the effective management of its existing insurance portfolio. Significant revenue streams include both new policy issuance and the ongoing collection of premiums from existing policies. NMI Holdings also benefits from strategic partnerships with mortgage lenders and servicers, which facilitate the distribution and origination of its insurance products. Key factors contributing to its earnings include housing market conditions, interest rates, and regulatory changes that impact mortgage lending and insurance practices.

NMI Holdings Earnings Call Summary

Earnings Call Date:Apr 29, 2025

(Q1-2025)

% Change Since: 12.84%|

Next Earnings Date:Aug 05, 2025

Earnings Call Sentiment Positive

The earnings call highlighted record financial results, growth in the insured portfolio, and a strong return on equity, supported by strategic partnerships. Despite minor concerns such as a slight decline in persistency and default rates, the overall sentiment is positive due to significant achievements outweighing lowlights.

Q1-2025 Updates

Positive Updates

Record Financial Performance

National MI delivered record financial results with total revenue of $173.2 million and GAAP net income of $102.6 million, representing a 19% increase from the previous quarter. The diluted EPS was $1.28, up 20% compared to the fourth quarter.

Growth in Insured Portfolio

The company generated $9.2 billion of NIW volume, ending the quarter with a record $211.3 billion of high-quality, high-performing primary insurance in force, up 6% compared to the first quarter of 2024.

Strong Return on Equity

National MI achieved an 18.1% return on equity, indicating a robust financial position and efficient use of capital.

Partnership with Tata Consultancy Services

The company extended its long-term IP engagement with Tata Consultancy Services on favorable terms into 2032, continuing a successful partnership that drives innovation and efficiency.

Negative Updates

Persistency Decline

12-month persistency decreased slightly to 84.3% in the first quarter compared to 84.6% in the fourth quarter.

Default Rates and Claims Expense

The company reported 6,859 defaults, including 625 notices of loans in FEMA declared disaster areas. The claims expense was $4.5 million, though this was an improvement from $17.3 million in the previous quarter.

Company Guidance

During the first quarter of 2025, NMI Holdings, Inc. reported strong financial performance with record financial metrics. The company generated $9.2 billion in New Insurance Written (NIW) volume and ended the quarter with $211.3 billion of primary insurance in force, marking a 1% increase from the fourth quarter of 2024 and a 6% rise from the first quarter of 2024. Total revenue reached a record $173.2 million, a 4% increase from the previous quarter and a 10.9% increase from the same period last year. The company achieved a record GAAP net income of $102.6 million, or $1.28 per diluted share, showcasing a 19% growth compared to the fourth quarter of 2024 and a 15% increase from the first quarter of the previous year. The return on equity was recorded at 18.1%. Additionally, the net yield for the quarter stood at 28.4 basis points, with core yield unchanged at 34.1 basis points. Furthermore, NMI's investment income amounted to $23.7 million, while underwriting and operating expenses were $30.2 million, resulting in an expense ratio of 20.2%. The company also reported 6,859 defaults, with a default rate remaining steady at 1%, and claims expenses decreased significantly to $4.5 million. With a strong customer franchise and a robust balance sheet, NMI Holdings continues to be well-positioned to provide high-value solutions and drive growth in its insured portfolio, supported by a comprehensive risk management framework and a favorable partnership extension with Tata Consultancy Services through 2032.

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.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
667.96M	650.97M	579.00M	524.46M	485.64M	436.19M
	Gross Profit
667.96M	650.97M	579.00M	524.46M	485.64M	436.19M
	EBIT
487.32M	463.41M	577.00M	398.39M	294.75M	214.82M
	EBITDA
525.12M	512.24M	456.46M	421.34M	339.75M	252.42M
	Net Income Common Stockholders
373.62M	360.11M	322.11M	292.90M	231.13M	171.57M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
352.82M	54.22M	333.29M	2.14B	2.16B	1.93B
	Total Assets
3.46B	3.35B	2.94B	2.52B	2.45B	2.17B
	Total Debt
0.00	415.15M	397.60M	396.05M	394.62M	393.30M
	Net Debt
341.49M	360.93M	302.24M	353.80M	321.14M	271.92M
	Total Liabilities
1.13B	1.13B	1.01B	902.30M	558.80M	505.89M
	Stockholders Equity
2.32B	2.22B	1.93B	1.61B	1.57B	1.37B
Cash Flow		Free Cash Flow
382.26M	386.70M	333.31M	302.82M	313.48M	240.44M
	Operating Cash Flow
383.18M	393.60M	342.68M	313.39M	325.72M	252.60M
	Investing Cash Flow
-349.19M	-339.29M	-200.00M	-289.79M	-374.18M	-629.55M
	Financing Cash Flow
-99.51M	-96.70M	-90.42M	-55.83M	-1.83M	462.80M

NMI Holdings Technical Analysis

Technical Analysis Sentiment

Positive

Last Price37.96

Price Trends

50DMA

35.80

Positive

100DMA

36.16

Positive

200DMA

37.70

Positive

Market Momentum

MACD

0.76

Positive

RSI

58.26

Neutral

STOCH

40.29

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NMIH, the sentiment is Positive. The current price of 37.96 is above the 20-day moving average (MA) of 37.34, above the 50-day MA of 35.80, and above the 200-day MA of 37.70, indicating a bullish trend. The MACD of 0.76 indicates Positive momentum. The RSI at 58.26 is Neutral, neither overbought nor oversold. The STOCH value of 40.29 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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	84 Outperform	$5.28B	7.91	14.09%	2.10%	4.33%	10.21%
MTG	79 Outperform	$6.17B	8.64	15.12%	1.94%	4.64%	15.36%
RDN	78 Outperform	$4.47B	8.47	13.22%	2.97%	2.95%	4.08%
ESNT	78 Outperform	$5.84B	8.43	13.29%	2.00%	9.87%	3.41%
NMIH	78 Outperform	$2.97B	8.20	17.38%	―	11.61%	14.35%
AGO	66 Neutral	$4.15B	9.91	7.90%	1.50%	-4.43%	-45.42%
Sector *	64 Neutral	$12.67B	9.74	7.58%	17015.08%	12.21%	-6.96%

* Financial Sector Average

Performance Comparison

NMIH

NMI Holdings

37.96

5.53

17.05%

AGO

Assured Guaranty

84.44

10.39

14.03%

MTG

MGIC Investment

25.99

6.00

30.02%

RDN

Radian Group

33.28

3.47

11.64%

ESNT

Essent Group

57.60

3.12

5.73%

ACT

Enact Holdings

35.17

5.27

17.63%

NMI Holdings Corporate Events

Executive/Board ChangesShareholder Meetings

NMI Holdings Concludes Annual Stockholders Meeting with Key Decisions

Neutral

May 9, 2025

On May 8, 2025, NMI Holdings held its Annual Meeting of Stockholders, where several key decisions were made. Stockholders elected directors, approved executive compensation, and ratified BDO USA, LLP as the independent accounting firm for 2025. These decisions reflect the company’s ongoing governance practices and could influence its strategic direction and stakeholder relations.

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.