NMI Holdings (NASDAQ: NMIH) and Stewart Information Services Corp (NYSE:STC) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, profitabiliy, earnings, analyst recommendations and dividends.

Profitability

This table compares NMI Holdings and Stewart Information Services Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NMI Holdings 52.34% 5.95% 3.36%
Stewart Information Services Corp 4.56% 11.45% 6.67%

Insider & Institutional Ownership

80.7% of NMI Holdings shares are held by institutional investors. Comparatively, 93.6% of Stewart Information Services Corp shares are held by institutional investors. 5.4% of NMI Holdings shares are held by company insiders. Comparatively, 2.2% of Stewart Information Services Corp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for NMI Holdings and Stewart Information Services Corp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NMI Holdings 0 1 3 0 2.75
Stewart Information Services Corp 3 1 0 0 1.25

NMI Holdings presently has a consensus target price of $13.25, suggesting a potential upside of 6.43%. Stewart Information Services Corp has a consensus target price of $41.00, suggesting a potential upside of 3.12%. Given NMI Holdings’ stronger consensus rating and higher probable upside, analysts clearly believe NMI Holdings is more favorable than Stewart Information Services Corp.

Valuation and Earnings

This table compares NMI Holdings and Stewart Information Services Corp’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NMI Holdings $151.40 million 4.92 $53.06 million $1.30 9.58
Stewart Information Services Corp $2.01 billion 0.47 $137.15 million $2.79 14.25

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

Dividends

Stewart Information Services Corp pays an annual dividend of $1.20 per share and has a dividend yield of 3.0%. NMI Holdings does not pay a dividend. Stewart Information Services Corp pays out 43.0% of its earnings in the form of a dividend.

Risk and Volatility

NMI Holdings has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500. Comparatively, Stewart Information Services Corp has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500.

NMI Holdings Company Profile

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.

Stewart Information Services Corp Company Profile

Stewart Information Services Corporation is a global real estate services company. The Company is engaged in offering products and services through its direct operations, network of Stewart Trusted Providers and family of companies. The Company operates through two segments: title insurance and ancillary services and corporate. Title insurance and related services (title) segment provides services needed to transfer title to property in a real estate transaction and includes services, such as searching, examining, closing and insuring the condition of the title to the property. The ancillary services and corporate segment provides appraisal and valuation services, document management, recording and call center-related services offered to mortgage lenders and servicers, mortgage brokers and mortgage investors. Its primary international operations are located in Canada, the United Kingdom, Australia and Central Europe.

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