Should Value Investors Buy NMI (NMIH) Stock?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

NMI (NMIH) is a stock many investors are watching right now. NMIH is currently sporting a Zacks Rank #2 (Buy) and an A for Value.

Another valuation metric that we should highlight is NMIH's P/B ratio of 1.26. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.47. Over the past 12 months, NMIH's P/B has been as high as 1.62 and as low as 1.10, with a median of 1.30.

Finally, our model also underscores that NMIH has a P/CF ratio of 8.06. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. NMIH's current P/CF looks attractive when compared to its industry's average P/CF of 12.32. Over the past year, NMIH's P/CF has been as high as 9.37 and as low as 6.79, with a median of 8.04.

The Hanover Insurance Group (THG) may be another strong Insurance - Property and Casualty stock to add to your shortlist. THG is a Zacks Rank of #2 (Buy) stock with a Value grade of A.

Additionally, The Hanover Insurance Group has a P/B ratio of 1.94 while its industry's price-to-book ratio sits at 1.47. For THG, this valuation metric has been as high as 2.21, as low as 1.78, with a median of 1.96 over the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that NMI and The Hanover Insurance Group are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, NMIH and THG feels like a great value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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