NMI Holdings Inc. NMIH has been trading above its 50-day simple moving average (SMA), signaling a short-term bullish trend. Its share price as of Jan. 21, 2025, was $37.76, down 11.1% from its 52-week high of $42.49.

The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as this is the first marker of an uptrend or downtrend.

With a market capitalization of $2.98 billion, NMIH is set to gain from improving mortgage insurance portfolio, higher new insurance written volume, a comprehensive reinsurance program, its solid capital position and effective capital deployment.

NMIH Trading Above 50-Day Moving Average

Image Source: Zacks Investment Research

This insurer has a solid track record of beating earnings estimates in each of the last four quarters, the average being 9.69%.

NMIH is an Outperformer

Shares of NMI Holdings have gained 25.4% in the past year, outperforming its industry, the Finance sector and the Zacks S&P 500 composite’s growth of 23.6%, 25% and 24.4%, respectively.

NMIH Outperformed Industry, Sector and S&P 500 in 1 Year

Image Source: Zacks Investment Research

NMIH’s Growth Projection Encourages

The Zacks Consensus Estimate for NMI Holdings’ 2025 earnings per share and revenues indicates an increase of 3% and 7.3%, respectively, from the corresponding 2024 estimates.

The expected long-term growth rate is pegged at 9.1%. Notably, earnings grew 18.7% in the past five years, better than the industry average of 11.4%. 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 17.8%, comparing favorably with the industry’s 7.5%. 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 has a $108.1 million share repurchase program under its kitty.

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

Attractive Valuation

NMIH shares are trading at a price-to-book multiple of 1.36, lower than the industry average of 1.59. The insurer has a Value Score of B. Before valuation expands, it is wise to take a position in the stock.

Shares of Cincinnati Financial Corporation CINF are trading at a discount to the industry average, while W.R. Berkley Corporation WRB and The Travelers Companies, Inc. TRV shares are trading at a multiple higher than the industry average.

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

W.R. Berkley Corporation (WRB) : Free Stock Analysis Report

Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report

NMI Holdings Inc (NMIH) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research