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Reasons Why Investors Should Buy MGIC Investment (MTG) Stock

Zacks Equity Research

MGIC Investment Corporation MTG is well-poised for growth, given a decline in claim payments, efficient capital deployment and higher premium.

The stock also carries a favorable Value Score of B. Back-tested results show that stocks with Value Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy) are best investment options.

Shares of this Zacks Rank #2 insurer have gained 38.2% year to date, outperforming the industry’s increase of 14.1%.

Estimates for MGIC Investment have been revised upward over the past seven and 60 days, reflecting analysts’ confidence in the stock. The Zacks Consensus Estimate for earnings for 2019 have moved north by 0.6% over the past seven days and the same for 2020 earnings has moved north by 3.4% over the past 60 days.

The company has a decent earnings surprise history. It beat estimates in each of the trailing four quarters, with the average beat being 12.63%.

MGIC Investment’s return on equity was 16.6% in the trailing 12-month period, higher than the industry average of 8.1%. Return on equity is a profitability measure that identifies a company’s efficiency in utilizing its shareholders’ funds.

MGIC Investment has been witnessing growth in new business written on the back of strong purchase market and potential share gain from Federal Housing Administration.

Given the decline in loss and claim filings, the balance sheet of the company and its financial profile are expected to improve in the near term.

Banking on solid capital position, the company deploys capital effectively via share buybacks and dividend payouts to enhance shareholder value.

The Zacks Consensus Estimate for 2020 earnings per share is pegged at $1.80, indicating increase of nearly 2% from the year-ago reported figure.

Other Stocks to Consider

Some other top-ranked stocks from the space include Kemper Corporation KMPR, EverQuote, Inc. EVER and Radian Group Incorporation RDN, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kemper provides property and casualty, and life and health insurance to individuals and businesses in the United States. The company beat the Zacks Consensus Estimate in the trailing four quarters, the average beat being 16.40%.

EverQuote enables consumers to shop for auto, home, and life insurance quotes. It serves carriers, agents, financial advisors, and indirect distributors and aggregators. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 84.25%.

Radian Group is engaged in the mortgage and real estate services business and offers credit-related insurance coverage in the United States. The company delivered average four-quarter positive surprise of 10.05%.

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MGIC Investment Corporation (MTG) : Free Stock Analysis Report
 
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