Contrasting NMI (NASDAQ:NMIH) and Safety Insurance Group (NASDAQ:SAFT)

NMI (NASDAQ:NMIH) and Safety Insurance Group (NASDAQ:SAFT) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NMI	55.05%	15.78%	10.64%
Safety Insurance Group	7.85%	9.64%	3.54%

Institutional and Insider Ownership

94.1% of NMI shares are held by institutional investors. Comparatively, 81.0% of Safety Insurance Group shares are held by institutional investors. 3.0% of NMI shares are held by insiders. Comparatively, 2.0% of Safety Insurance Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and target prices for NMI and Safety Insurance Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NMI	0	1	4	0	2.80
Safety Insurance Group	0	1	0	0	2.00

NMI presently has a consensus price target of $42.80, indicating a potential upside of 12.90%. Given NMI’s stronger consensus rating and higher probable upside, analysts clearly believe NMI is more favorable than Safety Insurance Group.

Earnings & Valuation

This table compares NMI and Safety Insurance Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NMI	$706.44 million	4.09	$388.93 million	$4.91	7.72
Safety Insurance Group	$1.25 billion	0.86	$99.25 million	$6.70	10.94

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

Volatility and Risk

NMI has a beta of 0.64, suggesting that its share price is 36% less volatile than the S&P 500. Comparatively, Safety Insurance Group has a beta of 0.22, suggesting that its share price is 78% less volatile than the S&P 500.

Summary

NMI beats Safety Insurance Group on 11 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 Safety Insurance Group

Safety Insurance Group, Inc. provides private passenger and commercial automobile, and homeowner insurance in the United States. The company’s private passenger automobile policies offer coverage for bodily injury and property damage to others, no-fault personal injury coverage for the insured/insured’s car occupants, and physical damage coverage for an insured’s own vehicle for collision or other perils. It also provides commercial automobile policies that offer insurance for commercial vehicles used for business purposes, including private passenger-type vehicles, trucks, tractors and trailers, insure individual vehicles, and commercial fleets; and homeowners policies, which provide coverage for homes, condominiums, and apartments for losses to a dwelling and its contents from various perils, and coverage for liability to others arising from ownership or occupancy. In addition, the company offers business owners policies that cover apartments and residential condominiums, restaurants, office condominiums, processing and services businesses, special trade contractors, and wholesalers. Further, it provides personal umbrella policies, which provide personal excess liability coverage over and above the limits of individual automobile, watercraft, and homeowner’s insurance policies; and commercial umbrella, which offers an excess liability product to clients, as well as underwrites dwelling fire insurance for non-owner-occupied residences. Additionally, the company offers inland marine coverage for homeowners and business owner policies, and watercraft coverage for small and medium sized pleasure crafts. It distributes its products through independent agents. The company was formerly known as Safety Holdings Inc and changed its name to Safety Insurance Group, Inc. in April 2002. Safety Insurance Group, Inc. was founded in 1979 and is headquartered in Boston, Massachusetts.