Over the past six months, NMI Holdings’s stock price fell to $37.07. Shareholders have lost 6.6% of their capital, which is disappointing considering the S&P 500 has climbed by 3%. This was partly driven by its softer quarterly results and might have investors contemplating their next move.
Given the weaker price action, is now an opportune time to buy NMIH? Find out in our full research report, it’s free.
Why Do Investors Watch NMI Holdings?
Founded in the aftermath of the 2008 housing crisis to bring new capacity to the mortgage insurance market, NMI Holdings (NASDAQ: NMIH) provides mortgage insurance that protects lenders against losses when homebuyers default on their mortgage loans.
Three Things to Like:
1. Growing BVPS Reflects Strong Asset Base
In the insurance industry, book value per share (BVPS) provides a clear picture of shareholder value, as it represents the total equity backing a company’s insurance operations and growth initiatives.
NMI Holdings’s BVPS increased by 16.1% annually over the last five years, and growth has recently accelerated as BVPS grew at an impressive 19.5% annual clip over the past two years (from $23.81 to $33.98 per share).
2. Stellar ROE Showcases Lucrative Growth Opportunities
Return on equity (ROE) serves as a comprehensive measure of an insurer's performance, showing how efficiently it converts shareholder capital into profits. Strong ROE performance typically translates to better returns for investors through a combination of earnings retention, share repurchases, and dividend distributions.
Over the last five years, NMI Holdings has averaged an ROE of 17.4%, excellent for a company operating in a sector where the average shakes out around 12.5% and those putting up 20%+ are greatly admired. This shows NMI Holdings has a strong competitive moat.
Final Judgment
NMI Holdings is an interesting business with potential. With the recent decline, the stock trades at 1× forward P/B (or $37.07 per share). Is now a good time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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