PennyMac Financial Services (NYSE:PFSI) and NMI (NASDAQ:NMIH) Financial Comparison

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

Analyst Ratings

This is a summary of current ratings and recommmendations for PennyMac Financial Services and NMI, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PennyMac Financial Services	2	4	4	0	2.20
NMI	0	2	5	0	2.71

PennyMac Financial Services currently has a consensus price target of $104.88, indicating a potential upside of 69.08%. NMI has a consensus price target of $49.14, indicating a potential upside of 26.56%. Given PennyMac Financial Services’ higher probable upside, equities analysts clearly believe PennyMac Financial Services is more favorable than NMI.

Insider and Institutional Ownership

57.9% of PennyMac Financial Services shares are held by institutional investors. Comparatively, 94.1% of NMI shares are held by institutional investors. 15.2% of PennyMac Financial Services shares are held by company insiders. Comparatively, 2.4% of NMI shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares PennyMac Financial Services and NMI’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PennyMac Financial Services	17.74%	11.18%	1.65%
NMI	54.10%	15.13%	10.21%

Risk & Volatility

PennyMac Financial Services has a beta of 1.45, meaning that its share price is 45% more volatile than the S&P 500. Comparatively, NMI has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500.

Valuation and Earnings

This table compares PennyMac Financial Services and NMI”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PennyMac Financial Services	$2.05 billion	1.57	$501.08 million	$7.28	8.52
NMI	$730.78 million	4.00	$388.93 million	$5.08	7.64

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

About PennyMac Financial Services

PennyMac Financial Services, Inc., through its subsidiaries, engages in the mortgage banking and investment management activities in the United States. The company operates through three segments: Production, Servicing, and Investment Management. The Production segment is involved in the origination, acquisition, and sale of loans. This segment sources residential conventional and government-insured or guaranteed mortgage loans through correspondent production, consumer direct lending, and broker direct lending. The Servicing segment performs loan servicing for both newly originated loans that are under holding for sale and loans services for others. The segment performs loan administration, collection, and default management activities, including the collection and remittance of loan payments; responds to customer inquiries; provides accounting for principal and interest; holds custodial funds for the payment of property taxes and insurance premiums; counsels delinquent borrowers; and supervising foreclosures and property dispositions, as well as administers loss mitigation activities, such as modification and forbearance programs. The Investment Management segment is involved in sourcing, performing diligence, bidding, and closing investment asset acquisitions; managing correspondent production activities for PennyMac Mortgage Investment Trust; and managing acquired assets. The company was founded in 2008 and is headquartered in Westlake Village, 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.