Yahoo Finance MGIC Investment (MTG) Up 38.8% in a Year: Will the Rally Last?
MGIC Investment Corporation’s MTG shares have surged 38.8% in a year compared with the industry's growth of 24.6%. The Finance sector and the Zacks S&P 500 index have gained 26.2% and 28.2% in the said time frame, respectively. With a market capitalization of $5.58 billion, the average volume of shares traded in the last three months was 1.6 million.
Image Source: Zacks Investment Research
The rally was largely driven by solid insurance in force, a decline in loss and claims payments, better housing market fundamentals and prudent capital deployment.
MGIC Investment has a VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
This multi-line insurer carries a Zacks Rank #3 (Hold) at present. The company’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 15.45%.
Will the Bull Run Continue?
The Zacks Consensus Estimate for MGIC Investment’s 2024 revenues is pegged at $1.23 billion, implying a year-over-year improvement of 5.4%.
The consensus estimate for 2025 earnings per share and revenues indicates a year-over-year increase of 3.9% and 4.6%, respectively, from the corresponding 2024 estimates.
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 2% and 1.9% north, respectively, in the past 30 days, reflecting analysts’ optimism.
MGIC Investment has been witnessing an increase in new business written. The insurer expects new business, combined with increasing annual persistency, to result in the continued growth of the insurance-in-force portfolio.
MTG has been witnessing a declining pattern of claim filings. Thus, paid claims are likely to decrease further. A decline in loss and claims will strengthen the balance sheet and improve the insurer’s financial profile.
Banking on capital contribution, reinsurance transaction and cash position, this largest private mortgage insurer in the United States has been improving its capital position. Both leverage and times interest earned ratios have been improving.
The multi-line insurer has been seeing improving housing market fundamentals, such as household formations, home sales and the current capital status. As a result, the company will also be well-positioned to offer credit enhancement and low-down payment solutions to lenders, borrowers and government-sponsored enterprises. MTG remains optimistic about the opportunities in the housing market, which will enable the insurer to serve much more efficiently in the future.
Riding on a solid capital position, the company repurchased shares for $93.3 million, which included commissions. As of Mar 31, 2024, the company had $170 million remaining under a $500 million share repurchase program approved by the board of directors in 2023 that expires on Jul 1, 2025. In April 2024, the board approved an additional share repurchase program, authorizing the company to purchase up to $750 million of common stock prior to Dec 31, 2026.
Consistent with last quarter, the recent share repurchase activity reflects continued strong mortgage credit performance and financial results and share price valuation levels that are expected to be attractive to generate long-term value for remaining shareholders.
Stocks to Consider
Some better-ranked stocks from the multi-line insurance industry are Radian Group Inc. RDN, Old Republic International Corporation ORI and EverQuote, Inc. EVER, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Radian Group has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 22.79%. In the past year, shares of RDN have jumped 22.6%.
The Zacks Consensus Estimate for RDN’s 2024 and 2025 revenues implies year-over-year growth of 8.2% and 4.9%, respectively.
Old Republic International has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 6.61%. In the past year, shares of ORI have climbed 27%.
The Zacks Consensus Estimate for ORI’s 2024 and 2025 revenues implies year-over-year growth of 3.8% and 4.4%, respectively.
EverQuote has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 65.16%. In the past year, shares of EVER have skyrocketed 165.9%.
The Zacks Consensus Estimate for EVER’s 2024 and 2025 revenues implies year-over-year growth of 98% and 550%, respectively.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
MGIC Investment Corporation (MTG) : Free Stock Analysis Report
Radian Group Inc. (RDN) : Free Stock Analysis Report
EverQuote, Inc. (EVER) : Free Stock Analysis Report
Old Republic International Corporation (ORI) : Free Stock Analysis Report
