MGIC Investment Corporation (NYSE:MTG) Just Reported And Analysts Have Been Lifting Their Price Targets
The annual results for MGIC Investment Corporation (NYSE:MTG) were released last week, making it a good time to revisit its performance. MGIC Investment reported US$1.2b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$2.49 beat expectations, being 3.1% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on MGIC Investment after the latest results.
Check out our latest analysis for MGIC Investment
Taking into account the latest results, the most recent consensus for MGIC Investment from five analysts is for revenues of US$1.22b in 2024. If met, it would imply a modest 5.9% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to decrease 5.3% to US$2.48 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.23b and earnings per share (EPS) of US$2.40 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The consensus price target rose 6.2% to US$21.44, suggesting that higher earnings estimates flow through to the stock's valuation as well. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on MGIC Investment, with the most bullish analyst valuing it at US$24.00 and the most bearish at US$18.50 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that MGIC Investment is forecast to grow faster in the future than it has in the past, with revenues expected to display 5.9% annualised growth until the end of 2024. If achieved, this would be a much better result than the 0.3% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 4.9% per year. So it looks like MGIC Investment is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards MGIC Investment following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple MGIC Investment analysts - going out to 2025, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 2 warning signs for MGIC Investment (of which 1 can't be ignored!) you should know about.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
