Does MGIC Investment Corporation's (NYSE:MTG) Past Performance Indicate A Stronger Future?
Understanding how MGIC Investment Corporation (NYSE:MTG) is performing as a company requires looking at more than just a years' earnings. Today I will run you through a basic sense check to gain perspective on how MGIC Investment is doing by comparing its latest earnings with its long-term trend as well as the performance of its mortgage industry peers.
Check out our latest analysis for MGIC Investment
Did MTG's recent earnings growth beat the long-term trend and the industry?
MTG's trailing twelve-month earnings (from 30 September 2019) of US$654m has jumped 21% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 1.2%, indicating the rate at which MTG is growing has accelerated. What's the driver of this growth? Let's take a look at whether it is only owing to industry tailwinds, or if MGIC Investment has experienced some company-specific growth.
In terms of returns from investment, MGIC Investment has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 12% exceeds the US Mortgage industry of 0.9%, indicating MGIC Investment has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for MGIC Investment’s debt level, has increased over the past 3 years from 13% to 15%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 132% to 20% over the past 5 years.
What does this mean?
Though MGIC Investment's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as MGIC Investment gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research MGIC Investment to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for MTG’s future growth? Take a look at our free research report of analyst consensus for MTG’s outlook.
Financial Health: Are MTG’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
