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Why Meadowbrook Insurance (MIG) Could Be Positioned for a Slump

Zacks Equity Research

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

One such stock that you may want to consider dropping is Meadowbrook Insurance Group Inc. (MIG) which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #5 (Strong Sell) further confirms weakness in MIG.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen 1 estimate moving down in the past 30 days, compared with no upward revision. This trend has caused the consensus estimate to trend lower, going from earnings of 52 cents a share a month ago to its current level of 42 cents.

Also, for the current quarter, MIG has seen 2 downward estimate revisions versus no revision in the opposite direction, dragging the consensus estimate down to 11 cents a share from earnings per share of 13 cents over the past 30 days.  

The stock also has seen some pretty dismal trading lately, as the share price has dropped 13.8% in the past month.

If you are still interested in the Insurance Multiline industry, you may instead consider some better-ranked stocks including AEGON N.V. (AEG), Old Republic International Corporation (ORI) and Radian Group Inc. (RDN).While AEGON and Old Republic carry a Zacks Rank #1 (Strong Buy), Radian Group holds a Zacks Rank #2 (Buy). With favorable Zacks Ranks, these stocks may be better selections at this time.

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MEADOWBROOK INSURANCE (MIG): Free Stock Analysis Report

AEGON N V (AEG): Free Stock Analysis Report


RADIAN GROUP INC (RDN): Free Stock Analysis Report

Zacks Investment Research