NMIH Stock Study (10-11-26)

Posted by Mark on October 1, 2026 at 07:24 | Last modified: October 11, 2026 12:55

I recently studied NMI Holdings Inc. (NMIH, $40.01).

M* writes:

     > NMI Holdings Inc through its subsidiaries provides private mortgage
     > guaranty insurance. The company offers mortgage insurance, reinsurance
     > on loans, 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. It
     > protects lenders and investors from default-related losses on a
     > portion of the unpaid principal balance of a covered mortgage.

Since 2018, this small-size company grows sales and earnings at annualized rates of 13.2% and 16.5%, respectively. Lines are mostly up, straight, and parallel except for an EPS dip in ’20. Value Line (VL) gives an Earnings Predictability score of 85. Shares outstanding increase 16.7% (2.2%/year).

Since 2018, PTPM leads peer and industry averages while increasing from 49.7% to 70.7% (’25) with a last-5-year mean of 69.2%. ROE leads peer and industry averages while ranging from 13.9% in ’20 to 19.3% in ’19 with a last-5-year mean of 16.3% (shareholder equity consistently positive and growing 20.5% per year). Debt-to-capital is less than peer and industry averages ranging from 22.3% in ’20 down to 13.5% in ’19 with a last-5-year mean of 17.3%.

Interest coverage is 18.8 per M* who assigns no economic moat and a B grade for Financial Health (per BI website). VL gives a B++ grade for Financial Strength.

RightStock—a new tool on the BI website that I am tracking for informational purposes—gives a fitness score of 90 (“excellent”) and opportunity score of 46 (“limited”).

With regard to sales growth:

• YF gives YOY ACE 6.8 and 5.2% for ’26 and ’27 (based on 4 analysts).
• Zacks gives YOY ACE 6.7% and 2.4% for ’26 and ’27 (2 analysts).
• CFRA projects 6.8% YOY and 6.0% per year for ’26 and ’25-’27, respectively.

With a dearth of estimates available (none long-term), my 4.0% forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 5.9% and 5.0% per year for ’25-’27 and ’25-’28, respectively (based on 8 analysts).
• Nasdaq.com gives ACE 4.6% YOY and 4.8% per year for ’27 and ’26-’28 (5 / 5 / 3 analysts for ’26 / ’27 / ’28).
• Seeking Alpha projects 4-year annualized growth of 7.1%.
• Finviz gives 5-year annualized ACE of 4.8% (3).
• LSEG has LTG at 6.0%.
• YF gives ACE YOY 7.2% and 4.6% for ’26 and ’27, respectively (7).
• Zacks gives ACE YOY 6.7% and 4.5% for ’26 and ’27 along with 5-year annualized growth of 7.1% (5).
• VL gives ACE 5-year annualized of 7.1% (3).
• CFRA projects 7.3% YOY and 5.9% per year for ’26 and ’25-’27, respectively.

My 4.0% per year forecast is below the long-term-estimate range (mean of five 6.4% but with estimates so hard to come by, I wonder about data duplication on the 7.1%). Initial value is ’25 EPS of $4.92/share rather than 2026 Q2 EPS of $5.08 (TTM).

My Forecast High P/E is 8.0. Since 2018, high P/E falls from 15.3 to 8.8 (’25) with last-5-year mean of 8.9 and a last-5-year-mean average P/E of 7.4. I am near bottom of range (only 7.9 in ’23 is less).

My Forecast Low P/E is 6.0. Since ’18, low P/E falls from 8.3 to 6.5 with last-5-year mean of 6.0. I am forecasting the latter.

My Low Stock Price Forecast (LSPF) of $29.50 is default based on initial value from above: 26.3% less than previous close and 15.2% less than the 52-week low.

These inputs land NMIH in the HOLD zone with a U/D ratio of 0.8. Total Annualized Return (TAR) is 3.7%.

PAR (using Forecast Average—not High—P/E) of 0.9% is less than the risk-free rate (T-bills). Even if a healthy margin of safety (MOS) anchors the study, TAR is still less than the risk-free rate.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on only nine studies (too few for anything but anecdotal comparison) over the last 90 days (my study and four outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 6.0%, 7.0%, 8.8, and 6.0, respectively. I am lower on all but Forecast Low P/E (equal). VL projects a future average P/E of 8.1 that is greater than MS (7.4) and greater than mine (7.0).

MS high / low EPS are $7.12 / $4.97 versus my $5.99 / $4.92 (per share). My high EPS is less due to a lower growth rate.

MS LSPF of $31.00 implies a Forecast Low P/E of 6.2: greater than the above-stated 6.0. MS LSPF is 4.0% greater than the default $4.97/share * 6.0 = $29.82 resulting in more aggressive zoning. MS LSPF is also 5.1% greater than mine.

MOS is strong in the study because my inputs are less than most historical/analyst estimates/ranges. Also suggestive of MOS is MS TAR being 4.5%/year greater than mine.

With regard to valuation, PEG is 1.1 and 1.9 per M* and my projected P/E: fairly valued (0.46 per M*). Relative Value is slightly elevated at 1.07 [(current P/E) / 5-year-mean average P/E]. M* reports stock at 4% premium.

I’d say RightStock is spot-on with this one: very limited opportunity.

Per U/D, NMIH is a BUY under $34/share. Given forecast high price ~$48, [47.9 / ((14.87 / 100 ) +1 ) ^ 5] ~ $24 meets the BetterInvesting® TAR criterion.

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