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MGIC Investment Poised for Growth Despite Stiff Competition
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MGIC Investment Corporation (MTG - Free Report) , along with its subsidiaries, offers private mortgage insurance and ancillary services to lenders and government sponsored entities in the U.S.
The company remains committed toward growing its insurance in force and expects to write $46 billion of the same in 2016.
Moreover, the Multi line insurer has been witnessing a decline in claim payments over the last few years and the first three quarters of 2016 were also no exception. Given the declining pattern of claim filings, we expect paid claims to decrease further in 2016.
Further, the Zacks Rank #3 (Hold) multi line insurer’s improving private mortgage market share will boost its insurance in force, which in turn, is expected to drive future revenues. In fact, the company anticipates insurance in force to improve 5% in 2016.
In addition, a strong capital position will allow the company to repurchase some of its convertible debt. This will lower interest burden on MGIC Investment, thereby facilitating margin expansion.
Shares MGIC Investment gained about 16.8%, outpacing the Zacks categorized Multi line industry’s growth of 13%, year to date. Solid improvement in the top line and the bottom line as well as robust new insurance written and investment income performance resulted in the outperformance.
In fact, valuation at the current level is attractive as the stock is trading at a forward P/E ratio of 12.1, a 12.3% discount to the industry average of 13.8. Further, MGIC Investment has a trailing 12-month return on equity (ROE) of 16.6%, which is higher than the industry average of 5.2%. Notably, MGIC Investment carries a VGM score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
However, increase in premium rates will result in lower business written, which in turn might result in the stock underperforming. Further, intense competition in the mortgage insurance market is another headwind.
Alleghany Corporation deals with P&C reinsurance and insurance businesses in the U.S. and internationally. The company delivered positive surprises in three of the last four quarters with an average beat of 20.52%.
NMI Holdings offers private mortgage guaranty insurance services in the U.S. The company delivered positive surprises in all of the last four quarters with an average beat of 62.80%.
Arch Capital offers property, casualty, and mortgage insurance and reinsurance products worldwide. It delivered positive surprises in all of the last four quarters with an average beat of 9.27%.
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MGIC Investment Poised for Growth Despite Stiff Competition
MGIC Investment Corporation (MTG - Free Report) , along with its subsidiaries, offers private mortgage insurance and ancillary services to lenders and government sponsored entities in the U.S.
The company remains committed toward growing its insurance in force and expects to write $46 billion of the same in 2016.
Moreover, the Multi line insurer has been witnessing a decline in claim payments over the last few years and the first three quarters of 2016 were also no exception. Given the declining pattern of claim filings, we expect paid claims to decrease further in 2016.
Further, the Zacks Rank #3 (Hold) multi line insurer’s improving private mortgage market share will boost its insurance in force, which in turn, is expected to drive future revenues. In fact, the company anticipates insurance in force to improve 5% in 2016.
In addition, a strong capital position will allow the company to repurchase some of its convertible debt. This will lower interest burden on MGIC Investment, thereby facilitating margin expansion.
Shares MGIC Investment gained about 16.8%, outpacing the Zacks categorized Multi line industry’s growth of 13%, year to date. Solid improvement in the top line and the bottom line as well as robust new insurance written and investment income performance resulted in the outperformance.
In fact, valuation at the current level is attractive as the stock is trading at a forward P/E ratio of 12.1, a 12.3% discount to the industry average of 13.8. Further, MGIC Investment has a trailing 12-month return on equity (ROE) of 16.6%, which is higher than the industry average of 5.2%. Notably, MGIC Investment carries a VGM score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
However, increase in premium rates will result in lower business written, which in turn might result in the stock underperforming. Further, intense competition in the mortgage insurance market is another headwind.
Stocks to Consider
Some better-ranked stocks from the insurance industry include Alleghany Corporation , NMI Holdings, Inc. (NMIH - Free Report) and Arch Capital Group Ltd. (ACGL - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Alleghany Corporation deals with P&C reinsurance and insurance businesses in the U.S. and internationally. The company delivered positive surprises in three of the last four quarters with an average beat of 20.52%.
NMI Holdings offers private mortgage guaranty insurance services in the U.S. The company delivered positive surprises in all of the last four quarters with an average beat of 62.80%.
Arch Capital offers property, casualty, and mortgage insurance and reinsurance products worldwide. It delivered positive surprises in all of the last four quarters with an average beat of 9.27%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>