We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
MGIC Investment Stock Near 52-Week High: What Should Investors Do?
Read MoreHide Full Article
Shares of MGIC Investment Corporation (MTG - Free Report) closed at $24.75 on Friday, near its 52-week high of $26.56. This proximity underscores investor confidence. It has the ingredients for further price appreciation. The stock is trading above the 50-day and 200-day simple moving averages (SMA) of $24.54 and $23.40, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Shares of MTG have rallied 23% in the past year, outperforming the industry’s growth of 11.1%. The Finance sector and the S&P 500 composite returned 24.5% and 24.8%, respectively.
MTG Price Performance
Image Source: Zacks Investment Research
The multi-line insurer has a solid track record of beating earnings estimates in each of the last four quarters, the average being 16.25%.
Attractive Valuation
MGIC Investment shares are trading at a price-to-book multiple of 1.18, lower than the industry average of 2.37. The insurer has a Value Score of B. Before valuation expands, it is wise to take a position in the stock.
Shares of Assurant, Inc. (AIZ - Free Report) are trading at a discount to the industry average, while EverQuote, Inc. (EVER - Free Report) and CNO Financial Group, Inc. (CNO - Free Report) shares are trading at a multiple higher than the industry average.
MTG’s Favorable Return on Capital
Return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame. This reflects MTG’s efficiency in utilizing funds to generate income. ROIC was 11.4% in the trailing 12 months, better than the industry average of 2.3%.
Key Drivers of MTG
Given the strong purchase market and potential share gains from the Federal Housing Administration, MGIC Investment expects strong premium writing. Increased persistency rate should continue to boost insurance in force.
The insurance-in-force portfolio is set to grow, banking on new business and increasing annual persistency. A higher level of new and existing home sales, an increased percentage of homes purchased for cash and an improved level of refinance activity in an improving housing market should help this largest private mortgage insurer to grow in the United States.
MTG has been witnessing a declining pattern of claim filings. A decline in loss and claims will strengthen the balance sheet and improve the insurer’s financial profile.
The insurer is improving its capital position with capital contribution, reinsurance transactions and cash position. Both leverage and times interest earned ratios have been improving.
A solid capital position supports MTG in wealth distribution. As of Oct. 31, 2024, the insurer had $578.6 million remaining under a $750 million share repurchase program approved by the board, which expires on Dec. 31, 2026. Its share repurchase activity reflects continued strong mortgage credit performance.
The Zacks Consensus Estimate for MGIC Investment’s 2025 revenues indicates an increase of 2.9% from the corresponding 2024 estimate.
Conclusion
MTG has been seeing improving housing market fundamentals, such as household formations and home sales and the current capital status. Higher premiums, outstanding credit quality and new business will continue to induce growth for MCIG.
The latest 13% increase in its quarterly dividend to 13 cents per share marked four straight years of dividend increases at a compound annual growth rate of 21%. Its current dividend yield is 2.1%. The affordability of shares should also add to the upside. It is, therefore, wise to hold on to this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
MGIC Investment Stock Near 52-Week High: What Should Investors Do?
Shares of MGIC Investment Corporation (MTG - Free Report) closed at $24.75 on Friday, near its 52-week high of $26.56. This proximity underscores investor confidence. It has the ingredients for further price appreciation. The stock is trading above the 50-day and 200-day simple moving averages (SMA) of $24.54 and $23.40, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Shares of MTG have rallied 23% in the past year, outperforming the industry’s growth of 11.1%. The Finance sector and the S&P 500 composite returned 24.5% and 24.8%, respectively.
MTG Price Performance
Image Source: Zacks Investment Research
The multi-line insurer has a solid track record of beating earnings estimates in each of the last four quarters, the average being 16.25%.
Attractive Valuation
MGIC Investment shares are trading at a price-to-book multiple of 1.18, lower than the industry average of 2.37. The insurer has a Value Score of B. Before valuation expands, it is wise to take a position in the stock.
Shares of Assurant, Inc. (AIZ - Free Report) are trading at a discount to the industry average, while EverQuote, Inc. (EVER - Free Report) and CNO Financial Group, Inc. (CNO - Free Report) shares are trading at a multiple higher than the industry average.
MTG’s Favorable Return on Capital
Return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame. This reflects MTG’s efficiency in utilizing funds to generate income. ROIC was 11.4% in the trailing 12 months, better than the industry average of 2.3%.
Key Drivers of MTG
Given the strong purchase market and potential share gains from the Federal Housing Administration, MGIC Investment expects strong premium writing. Increased persistency rate should continue to boost insurance in force.
The insurance-in-force portfolio is set to grow, banking on new business and increasing annual persistency. A higher level of new and existing home sales, an increased percentage of homes purchased for cash and an improved level of refinance activity in an improving housing market should help this largest private mortgage insurer to grow in the United States.
MTG has been witnessing a declining pattern of claim filings. A decline in loss and claims will strengthen the balance sheet and improve the insurer’s financial profile.
The insurer is improving its capital position with capital contribution, reinsurance transactions and cash position. Both leverage and times interest earned ratios have been improving.
A solid capital position supports MTG in wealth distribution. As of Oct. 31, 2024, the insurer had $578.6 million remaining under a $750 million share repurchase program approved by the board, which expires on Dec. 31, 2026. Its share repurchase activity reflects continued strong mortgage credit performance.
The Zacks Consensus Estimate for MGIC Investment’s 2025 revenues indicates an increase of 2.9% from the corresponding 2024 estimate.
Conclusion
MTG has been seeing improving housing market fundamentals, such as household formations and home sales and the current capital status. Higher premiums, outstanding credit quality and new business will continue to induce growth for MCIG.
The latest 13% increase in its quarterly dividend to 13 cents per share marked four straight years of dividend increases at a compound annual growth rate of 21%. Its current dividend yield is 2.1%. The affordability of shares should also add to the upside. It is, therefore, wise to hold on to this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.