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Are Investors Undervaluing MGIC Investment (MTG) Right Now?

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

MGIC Investment (MTG) is a stock many investors are watching right now. MTG is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 7.46. This compares to its industry's average Forward P/E of 8.13. MTG's Forward P/E has been as high as 7.70 and as low as 4.53, with a median of 6.78, all within the past year.

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Another notable valuation metric for MTG is its P/B ratio of 1.01. The P/B ratio is used to compare a stock's market value with 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 2.53. Within the past 52 weeks, MTG's P/B has been as high as 1.05 and as low as 0.79, with a median of 0.91.

Finally, our model also underscores that MTG has a P/CF ratio of 6.66. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. MTG's current P/CF looks attractive when compared to its industry's average P/CF of 9.31. MTG's P/CF has been as high as 6.73 and as low as 4.04, with a median of 5.01, all within the past year.

These are only a few of the key metrics included in MGIC Investment's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, MTG looks like an impressive value stock at the moment.

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Zacks Investment Research