UBS Trims Price Target on NMI Holdings to $40 From $41, Maintains Neutral Rating

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is NMI (NMIH). NMIH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Another valuation metric that we should highlight is NMIH's P/B ratio of 1.45. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. NMIH's current P/B looks attractive when compared to its industry's average P/B of 1.64. Within the past 52 weeks, NMIH's P/B has been as high as 1.63 and as low as 1.20, with a median of 1.33.

Finally, investors should note that NMIH has a P/CF ratio of 8.37. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. NMIH's P/CF compares to its industry's average P/CF of 11.93. NMIH's P/CF has been as high as 9.38 and as low as 6.91, with a median of 7.70, all within the past year.

The Travelers Companies (TRV) may be another strong Insurance - Property and Casualty stock to add to your shortlist. TRV is a # 2 (Buy) stock with a Value grade of A.

The Travelers Companies is trading at a forward earnings multiple of 12.53 at the moment, with a PEG ratio of 1.12. This compares to its industry's average P/E of 28.75 and average PEG ratio of 2.89.

TRV's price-to-earnings ratio has been as high as 17.36 and as low as 10.57, with a median of 11.61, while its PEG ratio has been as high as 1.71 and as low as 0.98, with a median of 1.07, all within the past year.

Additionally, The Travelers Companies has a P/B ratio of 2.07 while its industry's price-to-book ratio sits at 1.64. For TRV, this valuation metric has been as high as 2.22, as low as 1.75, with a median of 1.99 over the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that NMI and The Travelers Companies are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, NMIH and TRV feels like a great value stock at the moment.

Zacks Investment Research

NMI Holdings NMIH reported third-quarter 2024 operating net income per share of $1.15, which beat the Zacks Consensus Estimate by 4.6%. The bottom line increased 15% year over year.

The quarterly results reflected higher premiums and net investment income, and increased persistency, which drove growth in the company’s high-quality insured portfolio.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

NMI Holdings Inc Price, Consensus and EPS Surprise

NMI Holdings Inc price-consensus-eps-surprise-chart | NMI Holdings Inc Quote

Operational Update

NMI Holdings’ total operating revenues of $166 million increased 12.3% year over year on higher net premiums earned (up 10.2%) and net investment income (up 25.8%). Revenues beat the Zacks Consensus Estimate by 0.7%.

Primary insurance in force increased 6.5% to $207.5 billion. Annual persistency was 85.5%, up 10 basis points (bps) year over year. New insurance written was $12.2 billion, down 2% year over year.

Underwriting and operating expenses totaled $29.2 million, up 5.1% year over year. Insurance claims and claim expenses were $10.3 million, more than doubling year over year. The loss ratio was 7.2, which deteriorated 350 bps.

The adjusted expense ratio of 20.1 deteriorated 20 bps year over year, while the adjusted combined ratio of 27.5 fell 720 bps.

Financial Update

Book value per share, a measure of net worth, was up 7.8% year over year to $27.67 as of Sept. 30, 2024.

NMI Holdings had $133.3 million in cash and cash equivalents, which decreased 37.9% from 2023 end. The debt balance of $414.5 million increased 4.3% from the end of 2023.

The annualized adjusted return on equity was 17.5%, which contracted 150 bps year over year.

Total PMIERs available assets were $3 billion. Net risk-based required assets totaled $1.7 billion at the end of third-quarter 2024.

Zacks Rank

NMIH currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

The Travelers Companies TRV reported third-quarter 2024 core income of $5.24 per share, which beat the Zacks Consensus Estimate by 38.2%. Total revenues increased 10.7% from the year-ago quarter to $11.84 billion, primarily driven by higher premiums, net investment income, fee income and other revenues. The top-line figure beat the Zacks Consensus Estimate by 1.4%.

Travelers’ net written premiums increased 8% year over year to a record $11.31 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $10.5 billion. Travelers witnessed an underwriting gain of $685 million against a loss of $136 million incurred in the year-ago quarter. The consolidated underlying combined ratio of 85.6 improved 500 bps year over year. The combined ratio improved 780 bps year over year to 93.2 due to an improvement in the underlying combined ratio and net favorable prior-year reserve development.

The Progressive Corporation’s PGR third-quarter 2024 earnings per share of $3.97 beat the Zacks Consensus Estimate of $3.40. The bottom line more than doubled year over year. Operating revenues of $19.5 billion improved 24.9% year over year and beat the consensus estimate by 2.6%.

Net premiums written were $19.5 billion in the quarter, up 25% from $15.6 billion a year ago. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 340 bps from the prior-year quarter’s level to 89.

RLI Corp. RLI reported third-quarter 2024 operating earnings of $1.31 per share, beating the Zacks Consensus Estimate by 33.7%. The bottom line more than doubled year over year. Operating revenues for the reported quarter were $426 million, up 1.4% year over year. The top line beat the Zacks Consensus Estimate of $420 million.

Gross premiums written increased 13% year over year to $563.4 million. This uptick can be attributed to the solid performance of the Casualty (up 15.7%), Property (up 9.6%) and Surety segments (up 9%). Our estimate was $572.3 million. Underwriting income increased to $40.7 million from $4.2 million in the year-ago quarter. The combined ratio improved 910 bps year over year to 89.6. The Zacks Consensus Estimate for the metric was pegged at 96, while our estimate was 103.1.

Zacks Investment Research