Comparing NMI (NASDAQ:NMIH) & Mercury General (NYSE:MCY)

Mercury General (NYSE:MCY) and NMI (NASDAQ:NMIH) are both mid-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, institutional ownership, profitability and analyst recommendations.

Analyst Ratings

This is a summary of recent ratings and target prices for Mercury General and NMI, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercury General	0	0	1	2	3.67
NMI	0	1	4	0	2.80

Mercury General presently has a consensus price target of $100.00, indicating a potential upside of 14.02%. NMI has a consensus price target of $43.00, indicating a potential upside of 14.82%. Given NMI’s higher possible upside, analysts clearly believe NMI is more favorable than Mercury General.

Volatility & Risk

Mercury General has a beta of 0.92, indicating that its share price is 8% less volatile than the S&P 500. Comparatively, NMI has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500.

Valuation & Earnings

This table compares Mercury General and NMI”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercury General	$5.99 billion	0.81	$541.09 million	$9.77	8.98
NMI	$706.44 million	4.04	$388.93 million	$4.91	7.63

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

Profitability

This table compares Mercury General and NMI’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercury General	9.03%	20.74%	4.72%
NMI	55.05%	15.78%	10.64%

Insider and Institutional Ownership

42.4% of Mercury General shares are held by institutional investors. Comparatively, 94.1% of NMI shares are held by institutional investors. 35.5% of Mercury General shares are held by insiders. Comparatively, 3.0% of NMI 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.

Summary

Mercury General beats NMI on 9 of the 15 factors compared between the two stocks.

About Mercury General

Mercury General Corporation, together with its subsidiaries, engages in writing personal automobile insurance in the United States. The company also writes homeowners, commercial automobile, commercial property, mechanical protection, and umbrella insurance products. Its automobile insurance products include collision, property damage, bodily injury, comprehensive, personal injury protection, underinsured and uninsured motorist, and other hazards; and homeowners insurance products comprise dwelling, liability, personal property, and other coverages. The company sells its policies through a network of independent agents, insurance agencies, as well as directly through internet sales portals in Arizona, California, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas, and Virginia. Mercury General Corporation was founded in 1961 and is headquartered in Los Angeles, California.

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.