Head to Head Survey: RLI (NYSE:RLI) and NMI (NASDAQ:NMIH)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NMI	55.57%	16.51%	11.02%
RLI	17.81%	15.82%	4.52%

Analyst Ratings

This is a summary of recent ratings and recommmendations for NMI and RLI, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NMI	0	3	3	0	2.50
RLI	1	4	2	0	2.14

NMI currently has a consensus price target of $42.33, indicating a potential upside of 13.83%. RLI has a consensus price target of $78.60, indicating a potential upside of 19.46%. Given RLI’s higher possible upside, analysts clearly believe RLI is more favorable than NMI.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NMI	$650.97 million	4.43	$360.11 million	$4.71	7.90
RLI	$1.77 billion	3.41	$345.78 million	$3.49	18.85

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

Insider & Institutional Ownership

94.1% of NMI shares are owned by institutional investors. Comparatively, 77.9% of RLI shares are owned by institutional investors. 3.0% of NMI shares are owned by insiders. Comparatively, 2.2% of RLI shares are owned 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.

Risk & Volatility

NMI has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500. Comparatively, RLI has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500.

Summary

NMI beats RLI on 10 of the 14 factors compared between the two stocks.

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.

About RLI

RLI Corp., an insurance holding company, underwrites property and casualty insurance. Its Casualty segment provides commercial and personal coverage products; and general liability products, such as coverage for third-party liability of commercial insureds, including manufacturers, contractors, apartments, and mercantile. It also offers coverages for security guards and environmental liability for underground storage tanks, contractors and asbestos, and environmental remediation specialists; and professional liability coverages for errors and omission coverage for small to medium-sized design, technical, computer, and miscellaneous professionals. This segment provides commercial automobile liability and physical damage insurance to local, intermediate and long haul truckers, public transportation entities, and other types of specialty commercial automobile risks; incidental and related insurance coverages; inland marine coverages; management liability coverages, such as directors and officers liability insurance, fiduciary liability and coverages, employment practice liability, and for various classes of risks, including public and private businesses; and home business insurance products. The company's Property segment offers commercial property, cargo, hull, protection and indemnity, marine liability, inland marine, homeowners' and dwelling fire, and other property insurance products. Its Surety segment offers commercial surety bonds for medium to large-sized businesses; small bonds for businesses and individuals; and bonds for small to medium-sized contractors. The company also engages in various reinsurance coverages. It markets its products through branch offices, wholesale and retail brokers, carrier partners, and underwriting and independent agents. RLI Corp. was incorporated in 1965 and is headquartered in Peoria, Illinois.