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Here's Why Investors Should Hold MGIC Investment (MTG) Stock
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MGIC Investment Corporation (MTG - Free Report) has been gaining momentum on the back of higher annual persistency, lower leverage ratio and effective capital deployment.
Growth Projections
The Zacks Consensus Estimate for MGIC Investment’s 2022 and 2023 earnings per share is pegged at $2.09 and $2.19, indicating year-over-year growth of 9.4% and 4.5%, respectively.
Earnings Surprise History
MGIC Investment has a decent surprise history, beating earnings estimates in four of the last six reported quarters and meeting the same twice.
Return on Equity
MTG’s return on equity for the trailing 12 months is 13.6%, better than the industry average of 9.6%. It expanded 340 basis points (bps) year over year. This reflects efficiency in utilizing shareholders’ funds.
Business Tailwinds
Earnings estimates for 2022 have moved up 0.9% in the past 60 days, reflecting investors’ optimism. The expected long-term earnings growth rate is pegged at 5%.
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 MTG 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 the 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.
Sturdy Balance Sheet
MTG boasts a solid balance sheet with a low debt-to-capital ratio. The insurer’s balanced approach to maintaining a strong capital position provides sufficient flexibility to maximize its long-term value. A lower level of losses paid and higher net premium written are likely to benefit the cash flow from operations.
Capital Deployment
As of Dec 31, 2021, MGIC Investment had $500 million of authorization remaining to repurchase shares through 2023 under a share repurchase program approved by its board in October 2021. The insurer bought back shares worth $60 million in January 2022.
Zacks Rank & Price Performance
MGIC Investment currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 8.9% compared with the industry’s decline of 7.8%.
The bottom line of Cincinnati Financial surpassed earnings estimates in each of the last four quarters, the average being 38.48%. In the past year, the CINF stock has rallied 30.4%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2022 and 2023 earnings has moved 5.7% and 5.5% north, respectively, in the past 60 days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, the UFCS stock has declined 11.1%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. In the past year, KNSL has rallied 37.9%.
The Zacks Consensus Estimate for Kinsale Capital’s 2022 and 2023 earnings has moved 5.9% and 8.2% north, respectively, in the past 60 days.
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Here's Why Investors Should Hold MGIC Investment (MTG) Stock
MGIC Investment Corporation (MTG - Free Report) has been gaining momentum on the back of higher annual persistency, lower leverage ratio and effective capital deployment.
Growth Projections
The Zacks Consensus Estimate for MGIC Investment’s 2022 and 2023 earnings per share is pegged at $2.09 and $2.19, indicating year-over-year growth of 9.4% and 4.5%, respectively.
Earnings Surprise History
MGIC Investment has a decent surprise history, beating earnings estimates in four of the last six reported quarters and meeting the same twice.
Return on Equity
MTG’s return on equity for the trailing 12 months is 13.6%, better than the industry average of 9.6%. It expanded 340 basis points (bps) year over year. This reflects efficiency in utilizing shareholders’ funds.
Business Tailwinds
Earnings estimates for 2022 have moved up 0.9% in the past 60 days, reflecting investors’ optimism. The expected long-term earnings growth rate is pegged at 5%.
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 MTG 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 the 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.
Sturdy Balance Sheet
MTG boasts a solid balance sheet with a low debt-to-capital ratio. The insurer’s balanced approach to maintaining a strong capital position provides sufficient flexibility to maximize its long-term value. A lower level of losses paid and higher net premium written are likely to benefit the cash flow from operations.
Capital Deployment
As of Dec 31, 2021, MGIC Investment had $500 million of authorization remaining to repurchase shares through 2023 under a share repurchase program approved by its board in October 2021. The insurer bought back shares worth $60 million in January 2022.
Zacks Rank & Price Performance
MGIC Investment currently carries a Zacks Rank #3 (Hold). In the past year, the stock has lost 8.9% compared with the industry’s decline of 7.8%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the insurance sector are Cincinnati Financial Corporation (CINF - Free Report) , United Fire Group, Inc. (UFCS - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Cincinnati Financial surpassed earnings estimates in each of the last four quarters, the average being 38.48%. In the past year, the CINF stock has rallied 30.4%.
The Zacks Consensus Estimate for Cincinnati Financial’s 2022 and 2023 earnings has moved 5.7% and 5.5% north, respectively, in the past 60 days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. In the past year, the UFCS stock has declined 11.1%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. In the past year, KNSL has rallied 37.9%.
The Zacks Consensus Estimate for Kinsale Capital’s 2022 and 2023 earnings has moved 5.9% and 8.2% north, respectively, in the past 60 days.