Is NMI (NMIH) Stock Undervalued Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

NMI (NMIH) is a stock many investors are watching right now. NMIH is currently holding a Zacks Rank #2 (Buy) and a Value grade of A.

Another valuation metric that we should highlight is NMIH's P/B ratio of 1.26. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.40. Over the past year, NMIH's P/B has been as high as 1.62 and as low as 1.10, with a median of 1.30.

Finally, our model also underscores that NMIH has a P/CF ratio of 8.06. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. NMIH's current P/CF looks attractive when compared to its industry's average P/CF of 11.52. Over the past year, NMIH's P/CF has been as high as 9.37 and as low as 6.79, with a median of 8.04.

These are just a handful of the figures considered in NMI's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that NMIH is an impressive value stock right now.

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This article originally published on Zacks Investment Research (zacks.com).

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