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Reasons Why MGIC Investment (MTG) Stock is an Attractive Pick
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MGIC Investment Corporation (MTG - Free Report) should continue to benefit from higher volumes of new insurance written, lower ceded premiums written and a robust capital position
Northbound Estimate Revision
Estimates for 2022 and 2023 have moved up nearly 6.1% and 0.4%, respectively, in the past seven days, reflecting investor optimism.
Earnings Surprise History
MGIC Investment has a decent surprise history, beating earnings estimates in three of the last four quarters and meeting the same once.
Return on Equity
MTG’s return on equity for the trailing 12 months is 17%, better than the industry average of 9.3%. It expanded 430 basis points (bps) year over year. This reflects efficiency in utilizing shareholders’ funds.
Zacks Rank & Price Performance
MGIC Investment currently carries a Zacks Rank #2 (Buy). Year to date, the stock has gained 3.1% against the industry’s decline of 2.8%.
Image Source: Zacks Investment Research
Business Tailwinds
New business writings combined with a higher annual persistency are likely to boost insurance in force.
Higher insurance in force, lower ceded premiums written, net of profit commission, and higher premium yield are expected to benefit the net premium written of MGIC Investment.
The operating results of MTG should reflect the impacts of gains from the solid credit quality of higher insurance in force, strong housing market and decreasing delinquency rate.
New insurance written should gain from an increase in the mortgage origination market.
Considering higher consolidated investment portfolio and investment yields, net investment income is likely to improve.
The loss ratio is likely to improve, riding on fewer delinquency notices, reflecting the high quality of insurance in force, and favorable loss reserve development that indicates better-than-expected cure rates.
MTG expects to approach a longer-term debt-to-capital ratio in the low to mid-teens. MGIC Investment has constructed a solid capital base to increase the long-term value to shareholders while maintaining financial strength and flexibility.
As of Jun 30, 2022, MGIC Investment had $278 million remaining under a share repurchase program approved by its board in 2021 that expires at year-end 2023. In July 2022, MTG repurchased additional shares for $27.9 million under the remaining authorization.
Other Stocks to Consider
Some other top-ranked stocks from the multi-line insurance industry are James River Group Holdings, Ltd. (JRVR - Free Report) , Radian Group Inc. (RDN - Free Report) and Old Republic International Corporation (ORI - Free Report) . While James River Group and Radian Group sport a Zacks Rank #1 (Strong Buy), Old Republic International carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for James River Group’s 2022 and 2023 earnings implies 137% and 15.3% year-over-year growth, respectively.
The Zacks Consensus Estimate for JRVR’s 2022 and 2023 earnings has moved 2.6% and 4.6% north, respectively, in the past 30 days. Year to date, the insurer has declined 11.9%.
Radian Group’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 29.51%.
The Zacks Consensus Estimate for RDN’s 2022 and 2023 earnings has moved 16.1% and 4.2% north, respectively, in the past 30 days. Year to date, the insurer has increased 8.7%.
Old Republic International’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 15.1%.
The Zacks Consensus Estimate for ORI’s 2022 earnings has moved 4.2% north in the past 30 days. Year to date, the insurer has declined 5.3%.
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Reasons Why MGIC Investment (MTG) Stock is an Attractive Pick
MGIC Investment Corporation (MTG - Free Report) should continue to benefit from higher volumes of new insurance written, lower ceded premiums written and a robust capital position
Northbound Estimate Revision
Estimates for 2022 and 2023 have moved up nearly 6.1% and 0.4%, respectively, in the past seven days, reflecting investor optimism.
Earnings Surprise History
MGIC Investment has a decent surprise history, beating earnings estimates in three of the last four quarters and meeting the same once.
Return on Equity
MTG’s return on equity for the trailing 12 months is 17%, better than the industry average of 9.3%. It expanded 430 basis points (bps) year over year. This reflects efficiency in utilizing shareholders’ funds.
Zacks Rank & Price Performance
MGIC Investment currently carries a Zacks Rank #2 (Buy). Year to date, the stock has gained 3.1% against the industry’s decline of 2.8%.
Image Source: Zacks Investment Research
Business Tailwinds
New business writings combined with a higher annual persistency are likely to boost insurance in force.
Higher insurance in force, lower ceded premiums written, net of profit commission, and higher premium yield are expected to benefit the net premium written of MGIC Investment.
The operating results of MTG should reflect the impacts of gains from the solid credit quality of higher insurance in force, strong housing market and decreasing delinquency rate.
New insurance written should gain from an increase in the mortgage origination market.
Considering higher consolidated investment portfolio and investment yields, net investment income is likely to improve.
The loss ratio is likely to improve, riding on fewer delinquency notices, reflecting the high quality of insurance in force, and favorable loss reserve development that indicates better-than-expected cure rates.
MTG expects to approach a longer-term debt-to-capital ratio in the low to mid-teens. MGIC Investment has constructed a solid capital base to increase the long-term value to shareholders while maintaining financial strength and flexibility.
As of Jun 30, 2022, MGIC Investment had $278 million remaining under a share repurchase program approved by its board in 2021 that expires at year-end 2023. In July 2022, MTG repurchased additional shares for $27.9 million under the remaining authorization.
Other Stocks to Consider
Some other top-ranked stocks from the multi-line insurance industry are James River Group Holdings, Ltd. (JRVR - Free Report) , Radian Group Inc. (RDN - Free Report) and Old Republic International Corporation (ORI - Free Report) . While James River Group and Radian Group sport a Zacks Rank #1 (Strong Buy), Old Republic International carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for James River Group’s 2022 and 2023 earnings implies 137% and 15.3% year-over-year growth, respectively.
The Zacks Consensus Estimate for JRVR’s 2022 and 2023 earnings has moved 2.6% and 4.6% north, respectively, in the past 30 days. Year to date, the insurer has declined 11.9%.
Radian Group’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 29.51%.
The Zacks Consensus Estimate for RDN’s 2022 and 2023 earnings has moved 16.1% and 4.2% north, respectively, in the past 30 days. Year to date, the insurer has increased 8.7%.
Old Republic International’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 15.1%.
The Zacks Consensus Estimate for ORI’s 2022 earnings has moved 4.2% north in the past 30 days. Year to date, the insurer has declined 5.3%.