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MGIC Investment (MTG)
NYSE:MTG
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MGIC Investment
(NYSE:MTG)70Outperform
Positive Factors
Capital Returns
MGIC has been actively returning capital to shareholders through share repurchases and dividends.
Earnings
MGIC Investment Corp reported a quarterly EPS above expectations, driven by favorable loss reserve development.
Negative Factors
Interest Rates
Higher interest rates have led to slow insurance in force growth, which is expected to continue, putting pressure on MTG's earnings potential.
MGIC Investment (MTG) vs. S&P 500 (SPY)
Market Cap
$5.77B
Dividend Yield2.12%
Average Volume (3M)1.76M
Price to Earnings (P/E)8.2
Beta (1Y)0.81
Revenue Growth4.52%
EPS Growth15.94%
CountryUS
Employees627
SectorFinancial
Sector Strength93
IndustryInsurance
Share Statistics
EPS (TTM)2.89
Shares Outstanding242,706,670
10 Day Avg. Volume1,866,115
30 Day Avg. Volume1,757,761
Financial Highlights & Ratios
PEG Ratio0.52
Price to Book (P/B)N/A
Price to Sales (P/S)4.78
Price to Cash Flow (P/CF)7.90
P/FCF Ratio7.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$27.50Price Target Upside18.38% Upside
Rating ConsensusHold
Number of Analyst Covering6
MGIC Investment Business Overview & Revenue Model
Company DescriptionMGIC Investment Corporation (MTG) is a leading provider of private mortgage insurance in the United States. The company, through its primary subsidiary Mortgage Guaranty Insurance Corporation, offers mortgage insurance to lenders and investors covering losses from borrower defaults on residential mortgage loans. This service primarily aids in facilitating home ownership for individuals by enabling them to qualify for loans with lower down payments, thereby supporting the housing market and lending institutions.
How the Company Makes MoneyMGIC Investment Corporation generates revenue primarily through the premiums paid by lenders and borrowers for mortgage insurance policies. These premiums are the core revenue stream, as they are collected over the life of the insurance policies. Additionally, MGIC may earn income from its investment portfolio, which is comprised of premiums and other funds that are invested to generate returns. The company's earnings are influenced by factors such as the volume of new insurance written, the duration and performance of existing policies, interest rates, and housing market conditions. Strategic partnerships with lenders and investors also play a crucial role in expanding its market reach and maintaining a steady flow of insurance business.
MGIC Investment Financial Statement Overview
Summary
MGIC Investment exhibits strong financial health with consistent revenue growth and high profitability. The balance sheet reflects excellent stability with no debt as of 2024, enhancing financial security. Cash flow metrics indicate robust cash generation capabilities. However, the lack of EBIT and EBITDA metrics for the latest period slightly limits the evaluation of operational efficiency.Income Statement
MGIC Investment showed robust revenue growth, increasing from $1,155.1 million in 2023 to $1,207.7 million in 2024. The company achieved a high net profit margin of 63.17% in 2024, indicating strong profitability. However, the absence of EBIT and EBITDA figures for 2024 limits the assessment of operating efficiency.74
Positive
Balance Sheet
The company's financial position is strong with a debt-free status as of 2024 and a high equity ratio of 88.34%, showing high stability and low financial risk. The return on equity in 2024 was 14.75%, which indicates effective use of equity to generate profits.88
Very Positive
Cash Flow
MGIC Investment reported a healthy free cash flow growth from $710.9 million in 2023 to $723.9 million in 2024, indicating strong cash generation. The operating cash flow to net income ratio was 0.95, demonstrating efficient conversion of income to cash flow.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.21B | 1.16B | 1.17B | 1.19B | 1.20B | Gross Profit |
| 1.21B | 929.10M | 936.09M | 987.23M | 1.02B | EBIT |
| 0.00 | 1.12B | 1.14B | 793.54M | 550.21M | EBITDA |
| 0.00 | 974.36M | 1.19B | 939.15M | 676.67M | Net Income Common Stockholders |
| 762.99M | 712.95M | 865.35M | 634.98M | 446.09M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 149.94M | 363.67M | 327.38M | 284.69M | 287.95M | Total Assets |
| 6.55B | 6.54B | 6.21B | 7.33B | 7.35B | Total Debt |
| 644.67M | 643.20M | 662.81M | 1.15B | 1.24B | Net Debt |
| 415.18M | 279.53M | 335.43M | 862.02M | 955.24M | Total Liabilities |
| 1.37B | 1.47B | 1.57B | 1.15B | 1.24B | Stockholders Equity |
| 5.17B | 5.07B | 4.64B | 4.86B | 4.70B |
| Cash Flow | Free Cash Flow | |||
| 723.86M | 710.96M | 646.76M | 692.20M | 729.00M | Operating Cash Flow |
| 725.03M | 712.96M | 650.01M | 696.32M | 732.31M | Investing Cash Flow |
| -142.00M | -179.19M | 410.49M | -160.75M | -772.51M | Financing Cash Flow |
| -719.04M | -496.04M | -1.03B | -527.29M | 167.82M |
MGIC Investment Technical Analysis
Negative
23.23
Price Trends
24.25
Negative
24.55
Negative
23.80
Negative
Market Momentum
-0.26
Positive
36.13
Neutral
15.95
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MTG, the sentiment is Negative. The current price of 23.23 is below the 20-day moving average (MA) of 24.18, below the 50-day MA of 24.25, and below the 200-day MA of 23.80, indicating a bearish trend. The MACD of -0.26 indicates Positive momentum. The RSI at 36.13 is Neutral, neither overbought nor oversold. The STOCH value of 15.95 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MTG.
MGIC Investment Risk Analysis
MGIC Investment disclosed 15 risk factors in its most recent earnings report. MGIC Investment reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
MGIC Investment Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
84 Outperform | $5.10B | 7.81 | 14.29% | 2.17% | 5.45% | 7.31% | |
75 Outperform | $4.65B | 8.18 | 13.40% | 3.09% | 3.79% | 3.86% | |
75 Outperform | $2.78B | 8.00 | 17.38% | ― | 13.40% | 18.52% | |
75 Outperform | $5.85B | 8.23 | 13.63% | 1.99% | 17.11% | 11.19% | |
70 Outperform | $5.77B | 8.23 | 14.75% | 2.12% | 4.52% | 15.94% | |
67 Neutral | $4.27B | 12.18 | 6.71% | 1.45% | 1.80% | 71.04% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% |
* Financial Sector Average
Performance Comparison
MTG
MGIC Investment
23.23
2.75
13.43%
AGO
Assured Guaranty
82.90
-6.62
-7.39%
RDN
Radian Group
31.97
1.28
4.17%
ESNT
Essent Group
55.59
0.72
1.31%
NMIH
NMI Holdings
34.63
4.50
14.94%
ACT
Enact Holdings
33.59
4.38
14.99%
MGIC Investment Earnings Call Summary
Earnings Call Date: Feb 3, 2025 | % Change Since: -7.12% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
MGIC delivered a strong financial performance with significant net income growth and increased new insurance written, while managing expenses effectively. However, challenges such as a slightly higher delinquency rate and increased debt-to-income ratios reflect some underlying market pressures.Highlights
Strong Financial Performance
MGIC reported a net income of $185 million for Q4 2024 and $763 million for the full year, up from $730 million the previous year. The annualized return on equity was 14%.
Increased New Insurance Written
MGIC wrote $16 billion in new insurance in Q4 and $56 billion for the full year, marking a 21% increase from the prior year.
High Dividend Payout
MGIC returned $700 million to shareholders through dividends and share repurchases, representing a 92% payout ratio of the year's net income.
Operating Expense Reduction
Operating expenses decreased to $49 million in Q4 from $55 million the previous year, with full-year expenses down by $19 million to $218 million.
Lowlights
Increased Delinquency Rate
The account-based delinquency rate increased to 2.4% in Q4, up 16 basis points, partly due to hurricane-related delinquency notices.
Higher Debt-to-Income Ratios
Debt-to-income ratios have increased, reflecting affordability challenges in the housing market due to rising interest rates.
Company Guidance
During the Q4 2024 MGIC Investment Corporation Earnings Conference Call, several key financial metrics and guidance for future operations were discussed. MGIC reported a net income of $185 million for the quarter, translating to an annualized return on equity of 14%. For the full year, the company earned $763 million compared to $730 million in the previous year. Insurance in force reached over $295 billion, with new insurance written amounting to $16 billion in the fourth quarter and $56 billion for the full year, marking a 21% increase from the prior year. The company's persistency rate remained stable at 85%, and the average FICO score of the insurance portfolio was 747 at origination. Additionally, MGIC returned approximately $700 million to shareholders through stock repurchases and dividends, representing a 92% payout ratio of the year's net income. Looking ahead, MGIC expects operating expenses to decrease in 2025 to a range of $195 million to $205 million, down from $218 million in 2024. The company also highlighted its ongoing commitment to capital management, emphasizing the use of reinsurance to maintain financial strength and flexibility.MGIC Investment Corporate Events
Executive/Board ChangesShareholder Meetings
MGIC Investment Director Timothy Holt to Step Down
Neutral
Feb 11, 2025
On February 9, 2025, Timothy A. Holt, a member of the Board of Directors of MGIC Investment Corporation, announced that he will not seek re-election after his term ends at the Annual Meeting of Shareholders on April 24, 2025. His decision was not due to any disagreements regarding the company’s operations, policies, or practices, suggesting stability in the corporation’s governance and strategy.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.