MGIC Investment Corp. (MTG - Free Report) recently announced its June 2018 operating business statistics. Insurance in force was $200.7 billion, up 7.2% year over year. Delinquency loans (loans that failed to pay back) at MGIC Investment declined on a year-over-year basis. Delinquent inventory decreased 12.8% year over year to 36,037.
MGIC Investment has been severely hit by the financial crisis in 2008. Nonetheless, the company has been witnessing improvement in new business written owing to strengthening of purchase mortgage market, improving persistency and the company’s growing market share (measured by new insurance written). The company envisions 19-20% market share in the industry it operates in.
Given the strong purchase market and potential share gain from Federal Housing Administration (FHA), the company anticipates writing $50 billion new insurance in 2018. Such level of new business combined with expected rise in persistency will lead to increased insurance in force for 2018. MGIC Investment is well-poised to benefit from improving housing market fundamentals.
Also, considering the declining pattern of claim filings, we expect paid claims to further decline. Also, lower loss and claims will strengthen the company’s balance sheet and improve its financial profile.
Shares of MGIC Investment have lost 4.8% in a year, wider than the industry’s decrease of 1.7%. We expect the improving housing market and the fall in delinquency to boost the company’s earnings in the coming quarters and help the shares retain momentum.
MGIC Investment is set to report second-quarter results on Jul 19. The Zacks Consensus Estimate for current-quarter earnings is pegged at 35 cents, reflecting a year-over-year improvement of 12.9% on 1.7% higher revenues. Our proven model does not conclusively show that the company is likely to beat on earnings this time. While a Zacks Rank #2 (Buy) increases the predictive power of ESP, an Earnings ESP of 0.00% makes surprise prediction difficult. The company delivered a positive surprise in all the last four quarters with an average beat of 29.96%.
Other Stocks to Consider
Investors interested in multiline industry can look at Cigna Corp (CI - Free Report) , Assurant, Inc. (AIZ - Free Report) and The Hartford Financial Services Group, Inc. (HIG - Free Report) , each stock sharing the same bullish Zacks Rank of 2 with MGIC Investment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cigna provides health care and related benefits, the majority of which offered through workplace. The company came up with an average four quarter beat of 15.74%.
Assurant provides risk management solutions for housing and lifestyle markets in North America, Latin America, Europe and the Asia Pacific. The company delivered an average four-quarter earnings surprise of 11.81%.
The Hartford provides insurance and financial services to individual and business customers in the United States. The company pulled off an average four-quarter positive surprise of 9.55%.
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