NMI Holdings (NASDAQ: NMIH) and Fidelity National Financial (NYSE:FNFV) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, risk, institutional ownership, analyst recommendations, earnings, profitabiliy and dividends.

Insider & Institutional Ownership

81.0% of NMI Holdings shares are held by institutional investors. Comparatively, 83.2% of Fidelity National Financial shares are held by institutional investors. 5.4% of NMI Holdings shares are held by company insiders. Comparatively, 5.4% of Fidelity National Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for NMI Holdings and Fidelity National Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NMI Holdings 0 1 3 0 2.75
Fidelity National Financial 0 1 0 0 2.00

NMI Holdings presently has a consensus price target of $13.13, suggesting a potential upside of 12.66%. Fidelity National Financial has a consensus price target of $16.00, suggesting a potential downside of 1.54%. Given NMI Holdings’ stronger consensus rating and higher probable upside, analysts plainly believe NMI Holdings is more favorable than Fidelity National Financial.

Earnings & Valuation

This table compares NMI Holdings and Fidelity National Financial’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NMI Holdings $138.68 million 5.02 $45.75 million $1.23 9.47
Fidelity National Financial $1.33 billion 0.81 $82.00 million $1.59 10.22

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

Risk & Volatility

NMI Holdings has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500. Comparatively, Fidelity National Financial has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500.

Profitability

This table compares NMI Holdings and Fidelity National Financial’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%
Fidelity National Financial 6.75% 1.74% 0.83%

Summary

NMI Holdings beats Fidelity National Financial on 8 of the 13 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 Fidelity National Financial

Fidelity National Financial, Inc. (FNF) is a holding company. The Company is a provider of title insurance, technology and transaction services to the real estate and mortgage industries. The Company’s segments include Title, Black Knight, FNF Core Corporate and Other, Restaurant Group, and FNFV Corporate and Other. Its business is organized into groups, including FNF Group and FNF Ventures (FNFV). The Company offers title insurance through its title insurance underwriters: Fidelity National Title Insurance Company, Chicago Title Insurance Company, Commonwealth Land Title Insurance Company, Alamo Title Insurance and National Title Insurance of New York Inc., which collectively issue title insurance policies. FNF Group also provides mortgage technology solutions, including MSP, a residential mortgage servicing technology platform in the United States, through its subsidiary, Black Knight Financial Services, Inc. (Black Knight).

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