MGIC (MTG) Down 0.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for MGIC Investment (MTG). Shares have lost about 0.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MGIC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
MGIC Investment Q2 Earnings, Revenues Top, Fall Y/Y
MGIC Investment reported second-quarter 2023 operating net income per share of 68 cents, which beat the Zacks Consensus Estimate by 23.6%. However, the bottom line declined 16% year over year.
MGIC Investment recorded total operating revenues of $295.7 million, which decreased 0.7% year over year on lower premiums earned. The top line beat the consensus mark by 0.5%.
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.
Operational Update
Insurance in force increased 2% from the prior-year quarter to $292.5 billion. The figure was in line with the Zacks Consensus Estimate and our estimate.
The insurer witnessed an 11.3% decrease in primary delinquency to 23,823 loans.
Net premiums written decreased 5.4% year over year to $231.2 million. The figure was lower than our estimate of $236.2 million.
Net investment income increased 29.9% year over year to $52.3 million. Our estimate was $42.9 million.
Persistency — the percentage of insurance remaining in force from one year prior — was 83.5% as of Jun 30, 2023, up from 71.5% in the year-ago quarter.
New insurance written was $12.4 billion, down 49% year over year due to a decline in origination markets. The figure was lower than our estimate of $30 billion.
Net underwriting and other expenses totaled $56.6 million, up 0.3% year over year.
For the quarter under review, the loss ratio was negative 7.3% compared with 38.7% for the second quarter of 2022.
Financial Update
Book value per share, a measure of net worth, increased 8% from 2022-end to $17.09 as of Jun 30, 2023.
Shareholder equity was $4.8 billion as of Jun 30, 2023, up from $4.6 billion at 2022-end.
MGIC's PMIERs Available Assets totaled $5.8 billion, or $2.3 billion above its Minimum Required Assets as of Jun 30, 2023.
Assets were $6.4 billion as of Jun 30, 2023, up from $6.2 billion at 2022-end. Debt was $664 million as of Jun 30, 2023, up 0.2% from the 2022-end level.
Capital Deployment
MGIC Investment paid 10 cents in dividends per common share to shareholders during second-quarter 2023.
The company bought back 5 million shares in the second quarter and another 1.1 million shares in the third quarter to date. The board of directors approved an additional share repurchase program, authorizing the repurchase of an additional $500 million worth of shares through Jul 1, 2025.
The board also declared a dividend of 11.50 cents per common share to be paid on Aug 24, 2023 to shareholders of record as of Aug 10, 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, MGIC has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions 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 is part of the Zacks Insurance - Multi line industry. Over the past month, Enact Holdings, Inc. (ACT), a stock from the same industry, has gained 0.2%. The company reported its results for the quarter ended June 2023 more than a month ago.
Enact Holdings, Inc. reported revenues of $277.52 million in the last reported quarter, representing a year-over-year change of +1.5%. EPS of $1.10 for the same period compares with $1.26 a year ago.
Enact Holdings, Inc. is expected to post earnings of $0.86 per share for the current quarter, representing a year-over-year change of -26.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +6.9%.
Enact Holdings, Inc. has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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MGIC Investment Corporation (MTG) : Free Stock Analysis Report
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