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

Dividends

Stewart Information Services Corporation pays an annual dividend of $1.20 per share and has a dividend yield of 3.3%. NMI Holdings does not pay a dividend. Stewart Information Services Corporation pays out 43.0% of its earnings in the form of a dividend.

Institutional and Insider Ownership

80.6% of NMI Holdings shares are held by institutional investors. Comparatively, 94.2% of Stewart Information Services Corporation shares are held by institutional investors. 5.4% of NMI Holdings shares are held by insiders. Comparatively, 2.2% of Stewart Information Services Corporation shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares NMI Holdings and Stewart Information Services Corporation’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 Corporation 3.27% 9.77% 4.77%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for NMI Holdings and Stewart Information Services Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NMI Holdings 0 2 3 0 2.60
Stewart Information Services Corporation 3 1 0 0 1.25

NMI Holdings currently has a consensus price target of $13.20, indicating a potential upside of 16.30%. Stewart Information Services Corporation has a consensus price target of $41.00, indicating a potential upside of 12.21%. Given NMI Holdings’ stronger consensus rating and higher probable upside, equities research analysts clearly believe NMI Holdings is more favorable than Stewart Information Services Corporation.

Risk and Volatility

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

Valuation & Earnings

This table compares NMI Holdings and Stewart Information Services Corporation’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 4.49 $53.06 million $1.30 8.73
Stewart Information Services Corporation $2.01 billion 0.43 $137.15 million $2.79 13.10

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

Summary

Stewart Information Services Corporation beats NMI Holdings on 9 of the 16 factors compared between the two stocks.

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 Corporation 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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