Rocket Companies (NYSE:RKT) & NMI (NASDAQ:NMIH) Critical Analysis

NMI (NASDAQ:NMIH) and Rocket Companies (NYSE:RKT) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, dividends, risk and earnings.

Profitability

This table compares NMI and Rocket Companies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NMI	54.10%	15.13%	10.21%
Rocket Companies	4.70%	5.13%	1.88%

Analyst Ratings

This is a breakdown of current ratings and target prices for NMI and Rocket Companies, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NMI	0	2	5	0	2.71
Rocket Companies	0	8	8	0	2.50

NMI currently has a consensus price target of $48.43, suggesting a potential upside of 13.82%. Rocket Companies has a consensus price target of $19.12, suggesting a potential upside of 62.63%. Given Rocket Companies’ higher probable upside, analysts plainly believe Rocket Companies is more favorable than NMI.

Volatility and Risk

NMI has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Rocket Companies has a beta of 2.23, suggesting that its stock price is 123% more volatile than the S&P 500.

Insider and Institutional Ownership

94.1% of NMI shares are held by institutional investors. Comparatively, 4.6% of Rocket Companies shares are held by institutional investors. 2.4% of NMI shares are held by insiders. Comparatively, 57.7% of Rocket Companies shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares NMI and Rocket Companies”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NMI	$706.44 million	4.53	$388.93 million	$5.08	8.38
Rocket Companies	$6.70 billion	4.97	-$68.00 million	$0.14	83.96

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

Rocket Companies, Inc., a fintech holding company, provides mortgage lending, title and settlement services, and other financial technology services in the United States and Canada. It operates through two segments, Direct to Consumer and Partner Network. The company’s solutions include Rocket Mortgage, a mortgage lender; Amrock that provides title insurance, property valuation, and settlement services; Rocket Homes, a home search platform and real estate agent referral network, which offers technology-enabled services to support the home buying and selling experience; and Rocket Loans, an online-based personal loans business. It also offers Core Digital Media, a online marketing platform in the mortgage and personal financial product sectors; Rocket Money, a personal finance app that helps clients manage every aspect of their financial lives; Lendesk, a software services company that provides a point of sale system for mortgage professionals and a loan origination system for private lenders; Rock Connections, a sales and support platform specializing in contact center services; and Rocket Innovation Studio that recruits and mentors top technology talent. In addition, the company originates, closes, sells, and services agency-conforming loans. Rocket Companies, Inc. was founded in 1985 and is headquartered in Detroit, Michigan. The company operates as a subsidiary of Rock Holdings Inc.