NMI Holdings (NASDAQ: NMIH) and MGIC Investment Corporation (NYSE:MTG) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitabiliy and analyst recommendations.

Profitability

This table compares NMI Holdings and MGIC Investment Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NMI Holdings 54.25% 5.30% 3.01%
MGIC Investment Corporation 34.10% 17.00% 7.52%

Analyst Ratings

This is a summary of current ratings and recommmendations for NMI Holdings and MGIC Investment Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NMI Holdings 0 0 3 0 3.00
MGIC Investment Corporation 0 1 8 0 2.89

NMI Holdings currently has a consensus target price of $11.17, suggesting a potential upside of 1.98%. MGIC Investment Corporation has a consensus target price of $11.50, suggesting a potential upside of 5.80%. Given MGIC Investment Corporation’s higher probable upside, analysts plainly believe MGIC Investment Corporation is more favorable than NMI Holdings.

Earnings & Valuation

This table compares NMI Holdings and MGIC Investment Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NMI Holdings $138.68 million 4.72 $45.75 million $1.23 8.90
MGIC Investment Corporation $1.06 billion 3.80 $784.67 million $0.92 11.82

MGIC Investment Corporation has higher revenue and earnings than NMI Holdings. NMI Holdings is trading at a lower price-to-earnings ratio than MGIC Investment Corporation, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

81.0% of NMI Holdings shares are held by institutional investors. Comparatively, 86.1% of MGIC Investment Corporation shares are held by institutional investors. 5.4% of NMI Holdings shares are held by company insiders. Comparatively, 1.0% of MGIC Investment Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

NMI Holdings has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500. Comparatively, MGIC Investment Corporation has a beta of 2.1, meaning that its share price is 110% more volatile than the S&P 500.

Summary

MGIC Investment Corporation beats NMI Holdings on 9 of the 14 factors compared between the two stocks.

About NMI Holdings

NMI Holdings, Inc. (NMIH) provides private mortgage guaranty insurance through its insurance subsidiaries. The Company’s primary insurance subsidiary, National Mortgage Insurance Corporation (NMIC), is a mortgage insurance (MI) provider on loans purchased by the Government-sponsored enterprises (GSEs). Its reinsurance subsidiary, National Mortgage Reinsurance Inc One (Re One), provides reinsurance to NMIC on certain loans insured by NMIC. NMIH’s subsidiary, NMI Services, Inc. (NMIS), provides outsourced loan review services to mortgage loan originators. Its Primary mortgage insurance provides mortgage default protection on individual loans at specified coverage percentages. Primary insurance may be written on a flow basis, in which loans are insured as loan originations occur in individual, loan-by-loan transactions, or an aggregated basis, in which each loan in a portfolio of loans is individually insured in a single transaction, typically after the loans have been originated.

About MGIC Investment Corporation

MGIC Investment Corporation is a holding company. The Company, through its subsidiaries, provides private mortgage insurance and ancillary services. The Company provides mortgage insurance to lenders throughout the United States and to government-sponsored entities to protect against loss from defaults on low down payment residential mortgage loans. Its principal product is primary mortgage insurance. Primary insurance provides mortgage default protection on individual loans and covers unpaid loan principal, delinquent interest and certain expenses associated with the default and subsequent foreclosure or sale approved by the Company. Through certain other non-insurance subsidiaries, the Company also provides various services for the mortgage finance industry, such as contract underwriting, analysis of loan originations and portfolios, and mortgage lead generation. The Company’s subsidiaries include Mortgage Guaranty Insurance Corporation (MGIC) and MGIC Indemnity Corporation (MIC).

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