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MGIC Investment (MTG) Up 2.7% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for MGIC Investment Corporation (MTG - Free Report) . Shares have added about 2.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
MGIC Investment Beats on Q4 Earnings
MGIC Investment Corp. reported fourth-quarter 2016 operating net income per share of $0.28, which outpaced the Zacks Consensus Estimate of $0.22 per share by 27%. The bottom line also surged 47% year over year.
Operational Update
MGIC Investment recorded total operating revenue of $266 million, up 3.5% year over year. The upside was driven by higher premiums earned, investment income and other income. Also, the top line surpassed the Zacks Consensus Estimate of $256 million.
New insurance written was $12.8 billion in the reported quarter, up 30.6% from $9.8 billion in fourth-quarter 2015. As of Dec 31, 2016, the company’s primary insurance in force was $182 billion, up 4.3% year over year.
Persistency, or the percentage of insurance remaining in force from the year before, was 76.9% as of Dec 31, 2016 compared with 79.9% as of Dec 31, 2015.
Percentage of delinquent loans, including bulk loans, was 4.05% as of Dec 31, 2016 compared with 5.2% as of Sep 30, 2015.
Primary delinquent inventory plunged 19.7% year over year to $50.3 billion.
Net underwriting and other expenses totaled $40.6 million, up 9.7% year over year.
Losses incurred in the quarter narrowed to $47.7 million from $95.1 million. The $43 million reduction in losses in the fourth quarter was due to the positive development on the company’s primary loss reserve. This apart, the company witnessed a lesser new delinquent notices received and a lower claim rate.
Total losses and expenses decreased 30% year over year to $104.5 million on lower loss incurred and 3.6% decline in interest expenses. However, a 9.7% increase in underwriting and other expenses, net was a partial offset.
2016 Highlights
For 2016, net operating income came in at $0.99 per share, outpacing the Zacks Consensus Estimate of $0.86 per share.
Operating revenues were $1.1 billion, up 4% year over year.
New insurance written of $47.9 billion improved 11% from 2015. The insurer expects to write lower new insurance in 2017 than 2016 due to the current market conditions and a smaller origination market.
Financial Update
Book value per share, a measure of net worth, jumped nearly 13.7% year over year to $7.48 as of Dec 10, 2016 from $6.58 as of Dec 31, 2015.
As of Dec 31, 2016, MGIC Investment had approximately $4.8 billion in cash and investments, almost flat year over year.
Risk-to-capital ratio was 12:1 as of Dec 31, 2016 compared with 13:6.1 as of Dec 31, 2015.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. There has been one revision higher for the current quarter.
At this time, MGIC Investment's stock has an average Growth Score of 'C', however its Momentum is lagging with a 'D'. The stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stocks has an aggregte VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is solely suitable for value investors while growth investors may want to look elsewhere.
Outlook
While estimates have been trending upward for the stock, the magnitude of these revisions is net zero. Notably, the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.
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MGIC Investment (MTG) Up 2.7% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for MGIC Investment Corporation (MTG - Free Report) . Shares have added about 2.7% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
MGIC Investment Beats on Q4 Earnings
MGIC Investment Corp. reported fourth-quarter 2016 operating net income per share of $0.28, which outpaced the Zacks Consensus Estimate of $0.22 per share by 27%. The bottom line also surged 47% year over year.
Operational Update
MGIC Investment recorded total operating revenue of $266 million, up 3.5% year over year. The upside was driven by higher premiums earned, investment income and other income. Also, the top line surpassed the Zacks Consensus Estimate of $256 million.
New insurance written was $12.8 billion in the reported quarter, up 30.6% from $9.8 billion in fourth-quarter 2015.
As of Dec 31, 2016, the company’s primary insurance in force was $182 billion, up 4.3% year over year.
Persistency, or the percentage of insurance remaining in force from the year before, was 76.9% as of Dec 31, 2016 compared with 79.9% as of Dec 31, 2015.
Percentage of delinquent loans, including bulk loans, was 4.05% as of Dec 31, 2016 compared with 5.2% as of Sep 30, 2015.
Primary delinquent inventory plunged 19.7% year over year to $50.3 billion.
Net underwriting and other expenses totaled $40.6 million, up 9.7% year over year.
Losses incurred in the quarter narrowed to $47.7 million from $95.1 million. The $43 million reduction in losses in the fourth quarter was due to the positive development on the company’s primary loss reserve. This apart, the company witnessed a lesser new delinquent notices received and a lower claim rate.
Total losses and expenses decreased 30% year over year to $104.5 million on lower loss incurred and 3.6% decline in interest expenses. However, a 9.7% increase in underwriting and other expenses, net was a partial offset.
2016 Highlights
For 2016, net operating income came in at $0.99 per share, outpacing the Zacks Consensus Estimate of $0.86 per share.
Operating revenues were $1.1 billion, up 4% year over year.
New insurance written of $47.9 billion improved 11% from 2015. The insurer expects to write lower new insurance in 2017 than 2016 due to the current market conditions and a smaller origination market.
Financial Update
Book value per share, a measure of net worth, jumped nearly 13.7% year over year to $7.48 as of Dec 10, 2016 from $6.58 as of Dec 31, 2015.
As of Dec 31, 2016, MGIC Investment had approximately $4.8 billion in cash and investments, almost flat year over year.
Risk-to-capital ratio was 12:1 as of Dec 31, 2016 compared with 13:6.1 as of Dec 31, 2015.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. There has been one revision higher for the current quarter.
MGIC Investment Corporation Price and Consensus
MGIC Investment Corporation Price and Consensus | MGIC Investment Corporation Quote
VGM Scores
At this time, MGIC Investment's stock has an average Growth Score of 'C', however its Momentum is lagging with a 'D'. The stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stocks has an aggregte VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is solely suitable for value investors while growth investors may want to look elsewhere.
Outlook
While estimates have been trending upward for the stock, the magnitude of these revisions is net zero. Notably, the stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.