MGIC (MTG) Stock Jumps 5.7%: Will It Continue to Soar?
MGIC Investment (MTG) shares soared 5.7% in the last trading session to close at $20.88. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 3.6% gain over the past four weeks.
A solid insurance in force, a decline in loss and claims payments, lower delinquency, better housing market fundamentals and prudent capital deployment continue to drive the stock.
MGIC Investment has been witnessing an increase in new business written. The insurer expects new business, combined with increasing annual persistency, to result in the continued growth of the insurance-in-force portfolio. MTG has been witnessing a declining pattern of claim filings.
The multi-line insurer has been seeing improving housing market fundamentals, such as household formations, home sales and the current capital status. As a result, the company will also be well-positioned to offer credit enhancement and low-down payment solutions to lenders, borrowers and government-sponsored enterprises. MTG remains optimistic about the opportunities in the housing market, which will enable the insurer to serve much more efficiently in the future.
This mortgage insurance company is expected to post quarterly earnings of $0.60 per share in its upcoming report, which represents a year-over-year change of +11.1%. Revenues are expected to be $304.08 million, up 4.3% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For MGIC, the consensus EPS estimate for the quarter has been revised 0.6% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on MTG going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
MGIC is a member of the Zacks Insurance - Multi line industry. One other stock in the same industry, Radian (RDN), finished the last trading session 6.5% higher at $31.44. RDN has returned 7.3% over the past month.
Radian's consensus EPS estimate for the upcoming report has changed +1.2% over the past month to $0.83. Compared to the company's year-ago EPS, this represents a change of -15.3%. Radian currently boasts a Zacks Rank of #4 (Sell).
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