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Why Is MGIC (MTG) Down 3.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for MGIC Investment (MTG - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MGIC due for a breakout? 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 catalysts.
MGIC Investment's Q4 Earnings Top, Revenues Fall Y/Y
MGIC Investment Corporation reported fourth-quarter 2020 adjusted net operating income per share of 43 cents, which beat the Zacks Consensus Estimate by 10.3%. The bottom line declined 12.2% year over year.
The fourth-quarter performance was aided by strength of the purchase mortgage market and the refinance market as well as the company’s solid market presence. However, annual persistency remained low while primary delinquency inventory increased.
Operational Update
Insurance in force improved 10.9% to $246.6 billion, primarily attributable to new business writings, partly offset by lower persistency. The company witnessed a surge of 92.2% in primary delinquency to 57,710 loans due to the adverse economic impact of COVID-19. MGIC Investment reported total operating revenues of $299 million, which declined 3.5% year over year on lower net investment income and net premiums earned.
Net premiums earned fell 1.8% year over year to $261.4 million in the quarter. The downside was mainly due to an increase in accelerated premiums earned from single premium policy cancellations.
Net investment income decreased 12.6% year over year to $36.1 million, attributable to lower investment yields, partially offset by an increase in the consolidated investment portfolio. Persistency, the percentage of insurance remaining in force from one year prior, was 60.5% as of Dec 31, 2020, down 1530 basis points (bps) year over year.
New insurance written was $33.2 billion, up 72% year over year. The surge clearly highlights strength of the purchase mortgage market and the refinance market as well as the company’s solid market presence.
Net underwriting and other expenses totaled $48.3 million, which decreased 7.6% year over year. In the quarter under review, loss ratio was 17.5%, which deteriorated 860 bps year over year.
Full-Year Highlights
Adjusted net earnings of $1.32 per share beat the Zacks Consensus Estimate of $1.28. The bottom line declined 28.3% year over year. Operating total revenues were $2.5 billion, down 1.9% year over year. The top line beat the Zacks Consensus Estimate of $2.2 billion. New insurance written was $112.1 billion in 2020, up 76.8% over 2019.
Financial Update
Book value per share, a measure of net worth, grew 11.8% to $13.88 as of Dec 31, 2020 from 2019 end. MGIC Investment had $874 million in investments, cash and cash equivalents, up from $325 million as of 2019 end. Debt was $1.2 billion as on Dec 31, 2020, up from $0.8 billion as on Dec 31, 2019.
Total assets were $7.4 billion, up 19.4% from 2019-end level. PMIERs available assets were $5.3 billion, $1.8 billion above its minimum required assets as of Dec 31, 2020.
Capital Deployment
MGIC Investment paid out quarterly cash dividend of 6 cents per share in the reported quarter. The company also did not buy back shares during the quarter under review. It had $291 million remaining under its authorization as on 2020 end.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, MGIC has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 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 this revision looks promising. Notably, MGIC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is MGIC (MTG) Down 3.5% Since Last Earnings Report?
It has been about a month since the last earnings report for MGIC Investment (MTG - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MGIC due for a breakout? 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 catalysts.
MGIC Investment's Q4 Earnings Top, Revenues Fall Y/Y
MGIC Investment Corporation reported fourth-quarter 2020 adjusted net operating income per share of 43 cents, which beat the Zacks Consensus Estimate by 10.3%. The bottom line declined 12.2% year over year.
The fourth-quarter performance was aided by strength of the purchase mortgage market and the refinance market as well as the company’s solid market presence. However, annual persistency remained low while primary delinquency inventory increased.
Operational Update
Insurance in force improved 10.9% to $246.6 billion, primarily attributable to new business writings, partly offset by lower persistency. The company witnessed a surge of 92.2% in primary delinquency to 57,710 loans due to the adverse economic impact of COVID-19. MGIC Investment reported total operating revenues of $299 million, which declined 3.5% year over year on lower net investment income and net premiums earned.
Net premiums earned fell 1.8% year over year to $261.4 million in the quarter. The downside was mainly due to an increase in accelerated premiums earned from single premium policy cancellations.
Net investment income decreased 12.6% year over year to $36.1 million, attributable to lower investment yields, partially offset by an increase in the consolidated investment portfolio. Persistency, the percentage of insurance remaining in force from one year prior, was 60.5% as of Dec 31, 2020, down 1530 basis points (bps) year over year.
New insurance written was $33.2 billion, up 72% year over year. The surge clearly highlights strength of the purchase mortgage market and the refinance market as well as the company’s solid market presence.
Net underwriting and other expenses totaled $48.3 million, which decreased 7.6% year over year. In the quarter under review, loss ratio was 17.5%, which deteriorated 860 bps year over year.
Full-Year Highlights
Adjusted net earnings of $1.32 per share beat the Zacks Consensus Estimate of $1.28. The bottom line declined 28.3% year over year. Operating total revenues were $2.5 billion, down 1.9% year over year. The top line beat the Zacks Consensus Estimate of $2.2 billion. New insurance written was $112.1 billion in 2020, up 76.8% over 2019.
Financial Update
Book value per share, a measure of net worth, grew 11.8% to $13.88 as of Dec 31, 2020 from 2019 end. MGIC Investment had $874 million in investments, cash and cash equivalents, up from $325 million as of 2019 end. Debt was $1.2 billion as on Dec 31, 2020, up from $0.8 billion as on Dec 31, 2019.
Total assets were $7.4 billion, up 19.4% from 2019-end level. PMIERs available assets were $5.3 billion, $1.8 billion above its minimum required assets as of Dec 31, 2020.
Capital Deployment
MGIC Investment paid out quarterly cash dividend of 6 cents per share in the reported quarter. The company also did not buy back shares during the quarter under review. It had $291 million remaining under its authorization as on 2020 end.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, MGIC has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 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 this revision looks promising. Notably, MGIC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.