MGIC Investment Corporation’s MTG shares have jumped 62.6% for the year, compared with the industry’s growth of 27.3%. The financials sector and the Zacks S&P 500 have gained 26.1% and 27.7%, respectively, over the said time period.
With a market capitalization of $5.88 billion, the average volume of shares traded over the last three months is 2.1 million.
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The rally was largely driven by robust insurance in force, a decline in loss and damage payments, lower delinquencies, better housing fundamentals and prudent capital allocation.
This multi-line insurer currently carries a Zacks Rank #3 (Hold). The company’s earnings beat estimates for each of the past four quarters, delivering an average surprise of 14.84%.
Will the Bull Run continue?
The Zacks Consensus Estimate for MGIC Investment’s 2025 earnings per share indicates an annual increase of 4.2% from the consensus estimate for 2024. The consensus estimate for revenue is pegged at $1.30 billion, suggesting a year-over-year improvement of 4.6% of the 2024 consensus mark.
The Zacks Consensus Estimate for 2024 and 2025 earnings have moved 2.1% and 1.2% north, respectively, over the past 60 days, reflecting analyst optimism for the stock.
MGIC Investment is witnessing an increase in new business. The insurer expects new business, combined with increasing year-over-year, to result in continued growth of the portfolio of policies in force.
MTG is witnessing a declining claim pattern. Thus, the receivables paid are likely to decrease further. The reduction in losses and claims will strengthen the balance sheet and improve the insurer’s financial profile.
By banking capital contributions, reinsurance transactions and cash position, this largest private mortgage insurer in the United States improves its capital position. Both leverage and interest earned ratios are improving.
The multi-line insurer has seen improvements in key housing market indicators such as household formation, home sales and current equity 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 allow the insurer to serve much more efficiently in the future.
Based on a solid capital position, the company repurchased $340.8 million of shares and an additional $34 million through January 26, 2024. As of that date, the company had $240 million remaining under a $500 million share repurchase program approved from the board in 2023, which will expire on July 1, 2025.
Consistent with last quarter, recent share repurchase activity reflects continued strong mortgage and financial performance and share price valuation levels expected to generate long-term value for remaining shareholders.
Stocks to consider
Some better-ranked stocks from the multiline insurance industry are Enact Holdings ACT CNO Financial Group CNO and Horace Mann Educators Corporation HMN, each of which has a Zacks Rank #1 (Strong Buy) currently. You can see the full list of today’s Zacks #1 Rank stocks here.
Enact Holdings delivered a four-quarter average earnings surprise of 24.59%. For the year, ACT shares have jumped 33.9%.
The Zacks Consensus Estimate for ACT’s 2024 and 2025 earnings have risen 0.7% and 1.5%, respectively, over the past 30 days.
The Zacks Consensus Estimate for CNO Financial’s 2024 and 2025 earnings suggests annualized growth of 2.5% and 7.1%, respectively, over the consensus estimate for the respective years. For the year, CNO shares have jumped 20.8%.
CNO’s earnings beat estimates in two of the past four quarters and missed in the other two, with the average surprise coming in at 3.62%.
Horace Mann’s earnings beat estimates in three of the last four quarters and matched the first, with the average surprise being 15.24%. For a year, HMN shares have increased in price by 7.9%.
The Zacks Consensus Estimate for HMN’s 2024 and 2025 earnings suggests annualized growth of 104.5% and 19%, respectively, over the consensus estimate for the respective years.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
