NMIH

NMIH is a high-quality private mortgage insurer that has compounded steadily through a tough rate environment: revenue rose every year from $485M (FY2021) to $706M (FY2025, +8.5% YoY) and net income from $231M to $389M (+8.0%), with diluted EPS up 11.1% to $4.92 thanks in part to a 3.1% lower share count from $105M of buybacks. The economics are exceptional for an insurer — 55.1% net margin, 15.0% ROE, and $419M of operating cash flow against just $6.8M of capex. The balance sheet is a fortress: liabilities/equity of only 0.48x, equity up 16.9% to $2.59B, and retained earnings up 24.6% to $1.97B as the in-force book ($221.4B primary IIF, $59.3B RIF per the 10-K) seasons and earns. The low $43.9M cash line is not a red flag for an insurer whose assets sit in an investment portfolio.

The stock is priced as if this consistency will break. At $41.22 the P/E is 8.4x trailing EPS and the company trades at roughly 1.2x book (market cap $3.13B vs. $2.59B equity) — a discount for a business earning a mid-teens ROE and returning capital. A modest re-rating to ~10x EPS plus continued buyback-aided EPS growth supports a price in the low-$50s, with the seasoning portfolio and high persistency in a high-rate world (borrowers keep paying MI rather than refinancing into a no-MI loan) providing a durable revenue base.