Yahoo Finance Here's Why Hold Strategy Is Apt for MGIC Investment (MTG)
MGIC Investment Corporation MTG should continue to gain from fewer delinquency notices, favorable loss reserve development, higher persistency and a strong capital position.
Northbound Estimate Revision
Estimates for 2023 and 2024 have moved up nearly 3.3% and 0.8%, respectively, in the past 30 days, reflecting investors’ optimism.
Earnings Surprise History
MGIC Investment has a decent surprise history, beating earnings estimates in six of the last seven quarters and meeting the same once.
Return on Equity
MTG’s return on equity for the trailing 12 months is 18.8%, better than the industry average of 9.8%. Return on equity expanded 416 basis points year over year. This reflects efficiency in utilizing shareholders’ funds.
Zacks Rank & Price Performance
MGIC Investment currently carries a Zacks Rank #3 (Hold). In the past year, the stock has gained 12.1% against the industry’s decrease of 12.5%.
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Business Tailwinds
The Zacks Consensus Estimate for 2024 earnings per share is pegged at $2.34, indicating a year-over-year increase of 6.8%.
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 the multi-line insurer 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.
MGIC Investment has constructed a solid capital base to increase the long-term value to shareholders while maintaining financial strength and flexibility.
As of Mar 31, 2023, MTG had $36.1 million of authorization remaining to repurchase shares through the end of 2023 under a share repurchase program approved by the board of directors in October 2021. In April 2023, the multi-line insurer also approved a new share buyback plan, authorizing to repurchase an additional $500 million worth of shares till Jul 1, 2025.
MGIC Investment expects operating expenses in the range of $235 million to $245 million in 2023.
Stocks to Consider
Some better-ranked stocks from the multi-line insurance industry are American International Group, Inc. AIG, Assurant, Inc. AIZ and Old Republic International Corporation ORI, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
American International Group’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 9.22%.
The Zacks Consensus Estimate for AIG’s 2023 and 2024 earnings implies 44.6% and 19.7% year-over-year growth, respectively. In the past year, the insurer has lost 6.5%.
Assurant’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 18.1%.
The Zacks Consensus Estimate for AIZ’s 2023 and 2024 earnings implies 24.9% and 13.6% year-over-year growth, respectively. In the past year, the insurer has declined 32.6%.
Old Republic International’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 29.8%.
The Zacks Consensus Estimate for ORI’s 2023 and 2024 earnings has moved 9.1% and 6.4% north, respectively, in the past 60 days. In the past year, the insurer has gained 4.6%.
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American International Group, Inc. (AIG) : Free Stock Analysis Report
MGIC Investment Corporation (MTG) : Free Stock Analysis Report
Assurant, Inc. (AIZ) : Free Stock Analysis Report
Old Republic International Corporation (ORI) : Free Stock Analysis Report
