Why Is MGIC (MTG) Down 0.4% Since Last Earnings Report?
It has been about a month 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 the most recent earnings report in order to get a better handle on the important drivers.
MGIC Investment reported fourth-quarter 2023 operating net income per share of 67 cents, which beat the Zacks Consensus Estimate by 17.5%. The better-than-expected earnings were driven by higher net investment income and lower underwriting and other expenses. The bottom line improved 4.7% year over year.
MGIC Investment recorded total operating revenues of $285 million, which declined 2.1% year over year on lower net premiums written, partially offset by higher net investment income. The top line missed the consensus mark by 6%.
Operational Update
Insurance in force declined 0.6% from the prior-year quarter to $293.5 billion. The company missed our estimate of $300.7 billion.
The insurer witnessed a 2.8% decrease in primary delinquency to 25,650 loans.
Net premiums written declined 5.3% year over year to $219.1 million. The figure was lower than our estimate of $235 million.
Net investment income increased 24.7% year over year to $57.8 million. The company beat our estimate of $56.1 million.
Persistency, the percentage of insurance remaining in force from one year prior, was 86.1% as of Dec 31, 2023, up from 82.2% in the year-ago quarter.
New insurance written was $10.9 billion, down 15.5% year over year due to a decline in origination markets.
Net underwriting and other expenses totaled $54.7 million, down 25.5% year over year.
For the quarter under review, the loss ratio was negative 4.2% compared with negative 12.8% for the fourth quarter of 2023.
Full-Year Highlights
Operating net income per share of $2.49 decreased 10.8% from the 2022 figure of $2.79.
Total operating revenues of $1.2 billion decreased 1.5% year over year.
Financial Update
Book value per share, a measure of net worth, increased 17.6% from 2022-end to $18.61 as of Dec 31, 2023.
Shareholder equity was $5.1 billion as of Dec 31, 2023, up from $4.6 billion at 2022-end.
MGIC's PMIERs Available Assets totaled $5.8 billion, or $2.4 billion above its Minimum Required Assets as of Dec 31, 2023.
Assets were $6.5 billion as of Dec 31, 2023, up from $6.2 billion at 2022-end. Debt was $643.2 million as of Dec 31, up from $641.7 million at 2022-end.
Capital Deployment
MGIC Investment paid 11.50 cents in dividends per common share to shareholders during the fourth quarter of 2023.
The company bought back 7 million shares in the fourth quarter and another 1.8 million shares in the first quarter to date.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, MGIC has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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. It comes with little surprise MGIC has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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MGIC Investment Corporation (MTG) : Free Stock Analysis Report
