Financial Analysis: The PMI Group (OTCMKTS:PPMIQ) versus NMI (NASDAQ:NMIH)

The PMI Group (OTCMKTS:PPMIQ) and NMI (NASDAQ:NMIH) are both finance, insurance, and real estate companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.

Valuation & Earnings

This table compares The PMI Group and NMI”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
The PMI Group	N/A	N/A	N/A	N/A	N/A
NMI	$635.85 million	4.89	$322.11 million	$4.37	8.99

NMI has higher revenue and earnings than The PMI Group.

Profitability

This table compares The PMI Group and NMI’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
The PMI Group	N/A	N/A	N/A
NMI	56.20%	17.82%	11.73%

Analyst Recommendations

This is a breakdown of current recommendations for The PMI Group and NMI, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
The PMI Group	0	0	0	0	0.00
NMI	0	2	5	0	2.71

NMI has a consensus price target of $43.29, suggesting a potential upside of 10.17%. Given NMI’s stronger consensus rating and higher possible upside, analysts clearly believe NMI is more favorable than The PMI Group.

Insider & Institutional Ownership

94.1% of NMI shares are held by institutional investors. 2.7% of NMI shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

NMI beats The PMI Group on 9 of the 9 factors compared between the two stocks.

About The PMI Group

The PMI Group, Inc. (TPG) through its subsidiary PMI Mortgage Insurance Co. (MIC), and its affiliated companies (collectively PMI), provides residential mortgage insurance in the United States. During the year ended December 31, 2009, the Company operated in three business segments: United States Mortgage Insurance Operations, International Operations and Corporate and Other. As a United States residential mortgage insurer, PMI offers a variety of mortgage insurance products to meet the capital and credit risk mitigation needs of its customers. In November 2011, the Company announced that it has filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.

About NMI

NMI Holdings, Inc. provides private mortgage guaranty insurance services in the United States. The company offers mortgage insurance services, such as primary and pool insurance; and outsourced loan review services to mortgage loan originators. It serves national and regional mortgage banks, money center banks, credit unions, community banks, builder-owned mortgage lenders, internet-sourced lenders, and other non-bank lenders. The company was incorporated in 2011 and is headquartered in Emeryville, California.