NMIH Stock Trading at a Discount to Industry at 1.3X: Time to Hold?

Core Viewpoint - NMI Holdings Inc. (NMIH) is trading at a discount compared to its industry peers, with a forward price-to-book value of 1.3X, lower than the industry average of 1.56X, indicating potential investment opportunity [1] Group 1: Financial Performance - NMIH has a market capitalization of $2.86 billion and an average trading volume of 0.4 million shares over the last three months [2] - The company has a solid track record of beating earnings estimates in three of the last four quarters, with an average beat of 7.21$687.07 million, reflecting a 5.5% improvement [5] - For 2026, earnings per share and revenues are expected to increase by 9.1% and 3.9%, respectively, compared to 2024 estimates [5] - NMIH's earnings grew by 15.7% over the past five years, driven by its superior primary insurance in-force portfolio [6] Group 3: Return on Capital - NMIH's return on equity (ROE) for the trailing 12 months was 17.3%, significantly higher than the industry's 8.2%, indicating efficient use of shareholders' funds [10] Group 4: Market Opportunities - The U.S. residential mortgage market, valued at nearly $13 trillion, presents significant growth opportunities for NMIH in the mortgage insurance sector [11] - Growth in policy production is linked to increased penetration of existing customer accounts and activation of new accounts [12] Group 5: Strategic Initiatives - NMIH is focused on efficiency and expense management to drive margin expansion, engaging in share buybacks totaling$245 million, with $80 million remaining under the current program [13] - The company has a comprehensive reinsurance program to enhance its return profile and mitigate credit volatility [12] Group 6: Conclusion - NMIH is well-positioned for growth due to new primary insurance written, a strong reinsurance program, and favorable growth estimates, making it a stock to hold [14]