On Mar 24, 2016, we issued an updated research report on MGIC Investment Corp. MTG.
With respect to quarterly results, MGIC Investment’s fourth-quarter 2015 adjusted net income per share of 26 cents beat the Zacks Consensus Estimate by 4% and improved 26.3% year over year owing to a lower level of incurred losses and increase in revenues.
Also, this Zacks Rank #3 (Hold) multiline insurer delivered positive earnings surprise in each of the last four quarters with an average beat of 15.39%. The Zacks Consensus Estimate for 2016 and 2017 are currently pegged at 90 cents and $1.02, respectively. These translate to a year-over-year decrease of 20.4% in 2016 but an increase of 13.6% in 2017.
Larger origination volume as well as an increase in the private mortgage insurance industry’s market share resulted in the company witnessing a rise in new insurance written. MGIC investment expects the positive trend to continue, as the housing market recovers, thereby boosting the demand for mortgages.
Moreover, the steady improvement in housing market has helped to create conditions for continued growth in legacy books and low delinquencies on new book, especially given the tight current underwriting standards. These industry trends bode well for the company.
However, the revision of the premium rates is anticipated to have an adverse impact on the company’s top-line growth Also, intense competition and low ratings remain headwinds.
Stocks to Consider
Some better-ranked stocks from the same space are Swiss Re Ltd. SSREY, Hallmark Financial Services Inc. HALL and Markel Corp. MKL. Both Hallmark Financial and Markel sport a Zacks Rank #1 (Strong Buy), while Swiss Re holds a Zacks Rank #2 (Buy).
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