Yahoo Finance MGIC (MTG) Up 0.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for MGIC Investment (MTG). Shares have added about 0.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is MGIC due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
MGIC Investment Q1 Earnings Top, Revenues Miss Estimates
MGIC Investment Corporation reported first-quarter 2024 operating net income per share of 65 cents, which beat the Zacks Consensus Estimate by 8.3%. The better-than-expected earnings were driven by higher net investment income and lower underwriting and other expenses. The insurer continues to benefit from favorable credit trends and the resiliency of the housing market. The bottom line improved 20.3% year over year.
MGIC Investment recorded total operating revenues of $303 million, which increased 3.8% year over year on higher net investment income. The top line, however, missed the consensus mark by 0.4%.
Operational Update
Insurance in force declined 0.5% from the prior-year quarter to $290.9 billion. The company missed our estimate of $292.6 billion. The insurer witnessed a 2.5% decrease in primary delinquency to 24,142 loans.
Net premiums earned declined 2.5% year over year to $242.6 million. The figure was lower than our estimate of $252 million. Net investment income increased 21.4% year over year to $61 million. The company beat our estimate of $52.7 million.
Persistency, the percentage of insurance remaining in force from one year prior, was 85.7% as of Mar 31, 2024, up from 84.5% in the year-ago quarter.
New insurance written was $9.1 billion, up 11% year over year, benefiting from favorable credit trends and the resiliency of the housing market. Net underwriting and other expenses totaled $561 million, down 15.9% year over year. For the quarter under review, the loss ratio was 1.9% compared with 2.7% for the first quarter of 2023.
Financial Update
Book value per share, a measure of net worth, increased 1.9% from 2023-end to $18.97 as of Mar 31, 2023. Shareholder equity was $5.1 billion as of Mar 31, 2024, up 0.5% from 2023-end.
MGIC's PMIERs Available Assets totaled $5.9 billion or $2.5 billion above its Minimum Required Assets as of Mar 31, 2024. Assets were $6.5 billion as of Mar 31, 2024, flat compared with 2023-end. Debt was $650 million as of Mar 31, up from $643.2 million at 2023-end.
Capital Deployment
MGIC Investment paid 11.50 cents in dividends per common share to shareholders during the first quarter of 2024. The board also approved a dividend of 11.50 cents, to be paid out on May 21, 2024, to shareholders of record as of May 9.
The company bought back 4.7 million shares in the first quarter and another 2.7 million shares in the second quarter to date. In April, the board of directors approved an additional share repurchase program worth $750 million through Dec 31, 2026.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, MGIC has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, MGIC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
MGIC is part of the Zacks Insurance - Multi line industry. Over the past month, The Hartford (HIG), a stock from the same industry, has gained 3.9%. The company reported its results for the quarter ended March 2024 more than a month ago.
The Hartford reported revenues of $4.34 billion in the last reported quarter, representing a year-over-year change of +10.8%. EPS of $2.34 for the same period compares with $1.68 a year ago.
For the current quarter, The Hartford is expected to post earnings of $2.36 per share, indicating a change of +25.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.8% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for The Hartford. Also, the stock has a VGM Score of A.
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MGIC Investment Corporation (MTG) : Free Stock Analysis Report
The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report
