Magic (MGIC) AI Stock Analysis

• Market Cap: $894.10M
• Dividend Yield: 3.59%
• Average Volume (3M): 64.21K
• Price to Earnings (P/E): 23.8
• Beta (1Y): 0.59
• Revenue Growth: 8.75%
• EPS Growth: 5.17%
• Country: US
• Employees: 3,628
• Sector: Technology
• Sector Strength: 86
• Industry: Information Technology Services
• EPS (TTM): 0.25
• Shares Outstanding: 49,099,304
• 10 Day Avg. Volume: 70,343
• 30 Day Avg. Volume: 64,206
• PEG Ratio: 21.45
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 18.15
• Enterprise Value/Market Cap: 0.78
• Enterprise Value/Revenue: 0.32
• Enterprise Value/Gross Profit: 4.30
• Enterprise Value/Ebitda: 2.30
• 1Y Price Target: $16.00
• Price Target Upside: -12.14% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 78 Outperform
• Price Target: $20.50 ▲(12.58%Upside)

Magic's strong financial performance and positive earnings call sentiment are the primary drivers of the score. Technical analysis suggests caution due to potential overbought conditions, and valuation indicates the stock is fairly priced. The absence of impactful corporate events maintains focus on the company's core performance.

Positive Factors

Market Demand

Ongoing healthy demand for the company’s AI, low-code, no-code, and service offerings and growing pipeline activity support management’s fiscal 2025 top-line guidance of roughly 7% to 9%.

Revenue Growth

North America revenue increased 11.1% year-over-year and revenue from Israel increased 17.7% year-over-year.

Negative Factors

Capacity Reduction

Second quarter 2025 will include 4.5 fewer billable days compared to the first quarter, equivalent to a roughly 7% reduction in time and material capacity.

Merger Timeline

The pending merger with Matrix is now expected to close during the fourth quarter of 2025, slightly later than prior expectations.

Magic Business Overview & Revenue Model

Company Description

Magic (MGIC) is a leading provider of private mortgage insurance in the United States. The company primarily operates in the financial services sector, assisting homebuyers who have less than a 20% down payment with securing mortgages. MGIC's core product offering includes mortgage insurance solutions that protect lenders from default-related losses, thereby facilitating the homeownership process for consumers.

How the Company Makes Money

MGIC makes money through the collection of insurance premiums from lenders who require coverage for their mortgage loans. These premiums are typically paid monthly or annually, providing the company with a steady stream of revenue. The cost of premiums is determined based on the loan amount, the borrower's creditworthiness, and other risk factors. Additionally, MGIC may engage in strategic partnerships with financial institutions to expand its market reach and enhance its service offerings. Key factors contributing to its earnings include the overall health of the housing market, interest rates, and regulatory changes affecting mortgage insurance requirements.

Magic Financial Statement Overview

Summary

Magic's financial statements reveal strong revenue growth, effective cost management, and solid profitability. The balance sheet indicates a healthy leverage position and a strong equity base, while cash flow statements show robust cash generation. Improvements in net profit margins and ROE would further strengthen the financial position.

Income Statement

Magic demonstrated consistent revenue growth from $325.63M in 2019 to $552.52M in 2024, with a strong CAGR. The gross profit margin in 2024 is approximately 28.45%, indicating effective cost management. The net profit margin for 2024 is about 6.67%, showing solid profitability. EBIT and EBITDA margins are 11.08% and 14.85%, respectively, reflecting operational efficiency. Overall, the income statement reflects healthy growth and profitability, though there is room for enhancing net margins further.

Balance Sheet

The debt-to-equity ratio in 2024 stands at 0.31, indicating a moderate leverage position. The equity ratio is 51.31%, showing a strong equity base relative to assets. ROE is approximately 13.30%, which is robust and indicative of effective shareholder value creation. The balance sheet is stable, with prudent debt management and healthy equity levels, though further improvement in ROE would be beneficial.

Cash Flow

Free cash flow grew from $40.43M in 2019 to $73.16M in 2024, showcasing strong cash generation capabilities. The operating cash flow to net income ratio is approximately 2.03, indicating efficient conversion of earnings to cash. Free cash flow to net income ratio is 1.98, reflecting strong cash retention. While cash flow performance is commendable, continued focus on maintaining cash flow growth relative to net income will support financial stability.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	569.14M	552.52M	535.05M	566.79M	480.32M	371.19M
Gross Profit	161.11M	157.18M	152.99M	155.35M	132.99M	109.59M
EBITDA	62.74M	82.06M	82.27M	82.20M	74.47M	55.62M
Net Income	28.17M	36.88M	37.03M	40.47M	29.77M	25.19M
Balance Sheet
Total Assets	455.01M	540.33M	522.41M	510.97M	492.05M	443.32M
Cash, Cash Equivalents and Short-Term Investments	99.04M	112.83M	106.69M	86.97M	94.82M	89.65M
Total Debt	47.08M	86.15M	108.72M	79.79M	62.10M	49.40M
Total Liabilities	167.41M	239.26M	231.46M	205.70M	185.94M	149.34M
Stockholders Equity	254.24M	277.19M	265.98M	263.65M	265.25M	260.43M
Cash Flow
Free Cash Flow	43.68M	73.16M	64.19M	41.86M	35.86M	46.22M
Operating Cash Flow	46.82M	74.83M	68.99M	49.52M	40.49M	52.30M
Investing Cash Flow	-20.89M	-22.61M	-27.62M	-27.34M	-18.45M	-9.60M
Financing Cash Flow	-39.72M	-45.15M	-17.29M	-18.35M	-21.29M	-39.65M

Magic Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 18.21
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MGIC, the sentiment is Positive. The current price of 18.21 is above the 20-day moving average (MA) of 16.62, above the 50-day MA of 15.35, and above the 200-day MA of 12.63, indicating a bullish trend. The MACD of 0.75 indicates Negative momentum. The RSI at 74.77 is Negative, neither overbought nor oversold. The STOCH value of 95.64 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MGIC.

Magic Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MGIC	78 Outperform	$894.10M	23.80	13.87%	3.59%	8.75%	5.17%
IMOS	71 Outperform	$669.17M	18.51	4.72%	3.40%	-0.41%	-46.38%
Sector *	63 Neutral	$33.22B	5.99	-11.76%	1.91%	5.50%	-19.96%
CEVA	56 Neutral	$539.55M	―	-2.51%	―	13.09%	46.89%
XRX	55 Neutral	$664.17M	―	-67.27%	9.47%	-7.49%	-575.59%
CSIQ	49 Neutral	$758.80M	20.05	-0.39%	―	-19.06%	-104.91%
MLAB	47 Neutral	$538.29M	―	-1.29%	0.65%	11.47%	99.25%