Back to top

Image: Bigstock

MGIC Investment (MTG) Q2 Earnings: What's in the Cards?

Read MoreHide Full Article

MGIC Investment Corp. (MTG - Free Report) is set to report second-quarter 2016 results on Jul 19, before the market opens. Last quarter, the company posted a negative earnings surprise of 17.39%. Let’s see how things are shaping up for this announcement.

Factors to be Considered this Quarter

MGIC Investment is likely to have made modestly less business in the to-be-reported quarter. Premium rate revisions undertaken by the company, which generated comparable returns across a variety of loans, are expected to have contributed to the lesser business written.

Moreover, MGIC Investment might experience a decline in new insurance written in the second quarter owing to the revised premium rates.

However, the company has likely witnessed a decline in paid claims, which in turn, will strengthen its balance sheet and boost its financial profile. Moreover, the company expects the number of loans in delinquent inventory as well as claim rate applied to new delinquent notices to decline.

Also, the company has likely experienced growth in its insurance in force portfolio, which is the primary driver of its revenues.

With respect to the surprise trend, the company delivered a positive surprise in three of the last four quarters with an average beat of 10.04%.

MGIC INVSTMT CP Price and EPS Surprise

MGIC INVSTMT CP Price and EPS Surprise | MGIC INVSTMT CP Quote

Earnings Whispers

Our proven model does not conclusively show that MGIC Investment is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: MGIC Investment has an Earnings ESP of -10.00%. This is because the Most Accurate estimate is pegged at 18 cents, while the Zacks Consensus Estimate stands at 20 cents.

Zacks Rank: MGIC Investment carries a Zacks Rank #5 (Sell).

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies from the insurance industry that you may want to consider as these have the right combination of elements to post an earnings beat this quarter:

W.R. Berkley Corporation (WRB - Free Report) has an Earnings ESP of +4.94% and a Zacks Rank #3. The company is slated to report second-quarter earnings on Jul 25.

Loews Corporation (L - Free Report) has an Earnings ESP of +5.00% and a Zacks Rank #3. The company is set to report second-quarter earnings on Aug 1.

Cigna Corp. (CI - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank #3. The company is slated to report second-quarter earnings on Aug 4.

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 >>      

Published in