A month has gone by since the last earnings report for MGIC Investment (MTG). Shares have added about 5.8% in that time frame, outperforming 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 drivers.
MGIC Investment Q1 Earnings Top on Higher Persistency
MGIC Investment reported first-quarter 2023 operating net income per share of 54 cents, which beat the Zacks Consensus Estimate by 5.9% and our estimate of operating net income per share of 50 cents. However, the bottom line declined 10% year over year.
MGIC Investment recorded total operating revenues of $291.7 million, which decreased 1.5% year over year on lower premiums earned and other revenues. The top line missed the consensus mark by 2.2% and our estimate of $298.7 million.
The better-than-expected results of the insurer witnessed higher insurance in force and net investment income, partially offset by higher expenses and lower premiums.
Insurance in force increased 5.4% from the prior-year quarter to $292.4 billion. The figure missed the Zacks Consensus Estimate by 3.4% and our estimate of $302.6 billion.
The insurer witnessed an 18.7% decrease in primary delinquency to 24,757 loans.
Net premiums written decreased 5.1% year over year to $230.2 million. The figure was lower than our estimate of $244.1 million.
Net investment income increased 28.6% year over year to $49.2 million. The figure beat the consensus mark by 26.8% and our estimate of $38.8 million.
Persistency — the percentage of insurance remaining in force from one year prior — was 82% as of Mar 31, 2023, up from 66.9% in the year-ago quarter.
New insurance written was $8.2 billion, down 58.2% year over year due to a decline in origination markets. The figure was lower than our estimate of $27 billion.
Net underwriting and other expenses totaled $72.5 million, up 26.1% year over year. The increase was primarily due to higher pension and performance-based employee compensation expenses.
For the quarter under review, the loss ratio was 2.7% compared with (7.6%) for the first quarter of 2022.
Book value per share, a measure of net worth, increased 4.7% from 2022-end to $16.57 as of Mar 31, 2023.
Shareholder equity was $4.8 billion as of Mar 31, 2023, up from $4.6 billion at 2022-end.
MGIC's PMIERs Available Assets totaled $5.9 billion, or $2.4 billion above its Minimum Required Assets as of Mar 31, 2023.
Assets were $6.4 billion as of Mar 31, 2023, up from $6.2 billion at 2022-end. Debt was $663 million as of Mar 31, 2023, unchanged from the 2022-end level.
MGIC Investment paid 10 cents in dividends per common share to shareholders during first-quarter 2023.
The company bought back shares worth $77.9 million in the first quarter and another $23.8 million worth in April 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 6.12% due to these changes.
Currently, MGIC has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, MGIC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
MGIC belongs to the Zacks Insurance - Multi line industry. Another stock from the same industry, CNO Financial (CNO), has gained 5.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
CNO reported revenues of $1.01 billion in the last reported quarter, representing a year-over-year change of +19.4%. EPS of $0.51 for the same period compares with $0.42 a year ago.
For the current quarter, CNO is expected to post earnings of $0.72 per share, indicating a change of -15.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +7.5% over the last 30 days.
CNO has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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