Shares of NMI Holdings Inc. NMIH have lost 9.9% in the past year compared with the industry’s decline of 1.1%.
The NMIH stock decline appears to be driven by rising default rates, higher claims expenses, lower persistency and elevated mortgage rates, which have pressured investor sentiment. However, strong Net insurance written growth, higher premiums earned, high ROE, and ongoing share repurchases could support a rebound if defaults and claims remain stable and mortgage rates decline.
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Shares of First American Financial Corporation FAF and RenaissanceRe Holdings Ltd. RNR have gained 13.9% and 22.2%, respectively, while Axis Capital Holdings Limited AXS has lost 2.7% in the past year.
NMIH’s Average Target Price Suggests Upside
Based on short-term price targets offered by seven analysts, the Zacks average price target is $46.14 per share. The average suggests a potential 23.1% upside from the last closing price.
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NMIH’s Attractive Valuation
Shares of NMIH are trading at a discount compared with the industry. Its forward price-to-book value of 1.08X is lower than the industry average of 1.39X. The stock has a Value Score of A. This style score helps find the most attractive value stocks.
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NMIH’s Encouraging Growth Projection
The Zacks Consensus Estimate for NMI Holdings’ 2026 earnings per share (EPS) indicates a year-over-year increase of 4.1%. The consensus estimate for revenues is pegged at $744.98 million, implying a year-over-year improvement of 5.5%.
The consensus estimate for 2027 EPS and revenues indicates an increase of 5.9% and 2.3%, respectively, from the corresponding 2026 estimates.
NMI Holdings’ Favorable Return on Capital
Return on equity (ROE) for the trailing 12 months was 15.2%, which compared favorably with the industry’s 7.4%. This reflects its efficiency in utilizing shareholders’ funds.
The return on invested capital for the trailing 12 months was 12.1%, better than the industry average of 6.7%, reflecting NMIH’s efficiency in utilizing funds to generate income
Key Points to Note for NMIH
NMIH stands to gain from new business opportunities in a growing mortgage insurance market. In the first quarter of 2026, NIW increased 33% year over year to $12.3 billion, reflecting healthy demand for mortgage insurance and stable market share. NMI Holdings’ mortgage insurance portfolio is expected to create a strong foundation for future earnings. Strong customer relationships, increased penetration of existing accounts, and new customer wins are supporting growth in monthly and single-premium policy production.
Growth in insurance in force (IIF) remains a key driver for NMIH. The company ended the first quarter with a record $222.3 billion of primary insurance in force, reflecting continued growth in its insured portfolio. A larger IIF base provides greater earnings visibility, as it generates recurring premium income over the life of the insured loans. Supported by this portfolio growth, net premiums earned increased 4% year over year to $154.8 million in the first quarter of 2026. Premium revenue growthhelped offset the impact of lower persistency.
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.
NMIH continues to benefit from a strong capital position and robust cash generation. As of March 31, 2026, cash and cash equivalents were $70.7 million, up 60.8% from the 2025 end level. The company also maintained substantial capital flexibility, with $3.6 billion of PMIERs' available assets and net risk-based required assets totalled $2.2 billion at the end of first-quarter 2026. Management remains focused on delivering mid-teens returns to shareholders through repurchases and dividends and had $198.2 million remaining under its authorization as on March 31, 2026.
Risks for NMIH
Insurance claims expenses have increased over the past few years, driven by higher defaults, growth in the insured portfolio, and the aging of earlier policy vintages. Claims expense increased significantly to $20.7 million from $4.5 million in the prior-year quarter, while default inventory increased to 8,044 loans and the default rate climbed to 1.17%, raising concerns about future profitability.
Mortgage rates remain elevated near 6.5%, limiting housing affordability and slowing refinancing activity. A prolonged high-rate environment could restrain mortgage origination volumes and moderate future growth opportunities.
End Notes
NMI Holdings is well-positioned for growth on new primary insurance written, direct primary insurance in force, a comprehensive reinsurance program and a strong capital position. However, rising defaults and claims, along with elevated mortgage rates, remain headwinds
NMIH should also benefit from a higher return on capital, favorable growth estimates and the affordability of shares. It is, therefore, wise to retain this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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RenaissanceRe Holdings Ltd. (RNR): Free Stock Analysis Report
Axis Capital Holdings Limited (AXS): Free Stock Analysis Report
First American Financial Corporation (FAF): Free Stock Analysis Report
NMI Holdings Inc (NMIH): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).