NMIH
NMI Holdings, Inc.
$41.75
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 57.7% below fair value
You pay
$41.75
Bear
$65.30
Fair
$98.58
Bull
$112.83
Bear
$65.30
+56.4%
ROTCE 11.6% → 2.31x TBV
Fair
$98.58
+136.2%
ROTCE 15.4% → 3.49x TBV
Bull
$112.83
+170.3%
ROTCE 17.7% → 4.00x TBV
Key Value Driver
ROTCE (15.4%) vs. cost of equity (7.3%)
Implied Market Multiple
1.26x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $46.00 from 20 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $98.58 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $46.00 (from 20 analysts). Our estimate is 152% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly