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Why Is MGIC (MTG) Up 0.6% 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 added about 0.6% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is MGIC due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

MGIC Investment Q3 Earnings Top Estimates, Increase Y/Y

MGIC Investment reported third-quarter 2022 operating net income per share of 86 cents, which beat the Zacks Consensus Estimate by 56.4% and our estimate of 54 cents. The reported figure increased 86.9% year over year.

The insurer witnessed higher insurance in force and net investment income, offset by higher expenses and lower premiums.

Operational Update

Insurance in force increased 9.4% from the prior-year quarter to $293.6 billion. The figure was lower than our estimate of $313.4 billion.

The insurer witnessed a 30.8% decrease in primary delinquency to 25,878 loans.

MGIC Investment recorded total operating revenues of $296 million, which increased 0.3% year over year on higher net investment income. The top line missed the consensus mark by 8%.

Net premiums written decreased 2.1% year over year to $242.3 million. The decrease was due to an increase in ceded premiums and a decrease in premium yield. The figure was lower than our estimate of $262 million.

Net investment income increased 11.1% year over year to $42.5 million. The figure was higher than our estimate of $42.1 million.

Persistency — the percentage of insurance remaining in force from one year prior — was 75.7% as of Sep 30, 2022, up from 59.5% in the year-ago quarter. It compares favorably with our estimate of 67.5%.

New insurance written was $19.6 billion, down 31.7% year over year due to a decrease in the origination markets. The figure was lower than our estimate of $37.4 billion.

Net underwriting and other expenses totaled $61.7 million, up 7.9% year over year. The increase was primarily due to higher expenses related to investments in technology and data and analytics infrastructure.

For the quarter under review, the loss ratio was (41.7%) compared with 8.1% for the third quarter of 2021.

Financial Update

Book value per share, a measure of net worth, declined 0.1% from 2021-end to $15.16 as of Sep 30, 2022.

Shareholder equity was $4.5 billion as of Sep 30, 2022, down 8.2% from 2021 end.

MGIC's PMIERs Available Assets totaled $5.9 billion, or $2.6 billion above its Minimum Required Assets as of Sep 30, 2022.

Assets were $6.1 billion as of Sep 30, 2022, down 15.9% from 2021 end. Debt was $663 million as of Sep 30, 2022, down 36.4% from 2021 end.

Capital Deployment

MGIC Investment paid 10 cents in dividend per common share to shareholders during third-quarter 2022.

It bought back shares worth $84.7 million in the third quarter and another $33.7 million worth in October.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, MGIC has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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.


MGIC has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

MGIC is part of the Zacks Insurance - Multi line industry. Over the past month, CNO Financial (CNO - Free Report) , a stock from the same industry, has gained 10%. The company reported its results for the quarter ended September 2022 more than a month ago.

CNO reported revenues of $905.3 million in the last reported quarter, representing a year-over-year change of -6.5%. EPS of $0.49 for the same period compares with $0.72 a year ago.

For the current quarter, CNO is expected to post earnings of $0.53 per share, indicating a change of -39.1% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.8% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for CNO. Also, the stock has a VGM Score of B.

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