Head to Head Review: Rocket Companies (NYSE:RKT) and NMI (NASDAQ:NMIH)

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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for NMI and Rocket Companies, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NMI	0	2	5	0	2.71
Rocket Companies	0	7	8	0	2.53

NMI currently has a consensus price target of $48.43, suggesting a potential upside of 15.00%. Rocket Companies has a consensus price target of $18.88, suggesting a potential upside of 63.07%. Given Rocket Companies’ higher probable upside, analysts clearly believe Rocket Companies is more favorable than NMI.

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%

Insider and Institutional Ownership

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

Volatility and Risk

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NMI	$706.44 million	4.48	$388.93 million	$5.08	8.29
Rocket Companies	$8.97 billion	3.65	-$68.00 million	$0.14	82.68

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.

Summary

NMI beats Rocket Companies on 8 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 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.