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MGIC Investment Corp (MTG)
:MTG
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MGIC Investment
(NYSE:MTG)
Rating:79Outperform
Price Target:―
Positive Factors
Business Performance
New insurance written significantly exceeded expectations, indicating strong business performance without relying on price cuts.
Capital Return
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
Expenses
The expectation that loss and LAE expenses will increase over time could pressure MTG's earnings.
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.
Revenue
Total revenues slightly missed forecasts, with both insurance in-force and investment income coming in below expectations.
MGIC Investment (MTG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.20B
Dividend Yield1.94%
Average Volume (3M)1.76M
Price to Earnings (P/E)8.7
Beta (1Y)0.66
Revenue Growth4.64%
EPS Growth15.36%
CountryUS
Employees555
SectorFinancial
Sector Strength81
IndustryInsurance - Specialty
Share Statistics
EPS (TTM)0.75
Shares Outstanding237,437,440
10 Day Avg. Volume1,534,984
30 Day Avg. Volume1,758,187
Financial Highlights & Ratios
PEG Ratio1.99
Price to Book (P/B)1.24
Price to Sales (P/S)0.00
P/FCF Ratio8.21
Enterprise Value/Market Cap0.97
Enterprise Value/Revenue1.25
Enterprise Value/Gross Profit5.38
Enterprise Value/Ebitda1.55
Forecast
1Y Price Target
$27.50Price Target Upside5.24% Upside
Rating ConsensusHold
Number of Analyst Covering4
MGIC Investment Business Overview & Revenue Model
Company DescriptionMGIC Investment Corporation, through its subsidiaries, provides private mortgage insurance, other mortgage credit risk management solutions, and ancillary services to lenders and government sponsored entities in the United States, Puerto Rico, and Guam. The company offers primary mortgage insurance that provides mortgage default protection on individual loans, as well as covers unpaid loan principal, delinquent interest, and various expenses associated with the default and subsequent foreclosure. It also provides contract underwriting services, as well as reinsurance. The company serves originators of residential mortgage loans, including savings institutions, commercial banks, mortgage brokers, credit unions, mortgage bankers, and other lenders. MGIC Investment Corporation was founded in 1957 and is headquartered in Milwaukee, Wisconsin.
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 shows strong financial health with robust revenue growth, high profitability margins, and no debt, which enhances financial security. The cash flow metrics indicate strong cash generation capabilities. However, the absence of EBIT and EBITDA metrics limits the assessment of operating 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 | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.22B | 1.21B | 1.16B | 1.17B | 1.19B | 1.20B | Gross Profit |
| 1.12B | 1.21B | 929.10M | 936.09M | 987.23M | 1.02B | EBIT |
| 512.33M | 1.00B | 1.12B | 1.14B | 793.54M | 550.21M | EBITDA |
| 734.81M | 1.00B | 974.36M | 1.19B | 939.15M | 676.67M | Net Income Common Stockholders |
| 774.36M | 762.99M | 712.95M | 865.35M | 634.98M | 446.09M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 6.10B | 149.94M | 363.67M | 327.38M | 284.69M | 287.95M | Total Assets |
| 6.54B | 6.55B | 6.54B | 6.21B | 7.33B | 7.35B | Total Debt |
| 643.56M | 644.67M | 643.20M | 662.81M | 1.15B | 1.24B | Net Debt |
| 212.22M | 415.18M | 279.53M | 335.43M | 862.02M | 955.24M | Total Liabilities |
| 643.56M | 1.36B | 1.47B | 1.57B | 1.15B | 1.24B | Stockholders Equity |
| 5.10B | 5.17B | 5.07B | 4.64B | 4.86B | 4.70B |
| Cash Flow | Free Cash Flow | ||||
| 756.85M | 723.86M | 710.96M | 646.76M | 692.20M | 729.00M | Operating Cash Flow |
| 758.15M | 725.03M | 712.96M | 650.01M | 696.32M | 732.31M | Investing Cash Flow |
| -135.60M | -142.00M | -179.19M | 410.49M | -160.75M | -772.51M | Financing Cash Flow |
| -849.42M | -719.04M | -496.04M | -1.03B | -527.29M | 167.82M |
MGIC Investment Technical Analysis
Positive
26.13
Price Trends
24.61
Positive
24.35
Positive
24.46
Positive
Market Momentum
0.56
Positive
56.65
Neutral
32.78
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MTG, the sentiment is Positive. The current price of 26.13 is above the 20-day moving average (MA) of 25.87, above the 50-day MA of 24.61, and above the 200-day MA of 24.46, indicating a bullish trend. The MACD of 0.56 indicates Positive momentum. The RSI at 56.65 is Neutral, neither overbought nor oversold. The STOCH value of 32.78 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MTG.
MGIC Investment Risk Analysis
MGIC Investment disclosed 14 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 1 New Risks
1.
The inability of our insurance subsidiaries to pay dividends in sufficient amounts would harm our ability to meet our obligations, pay future shareholder dividends and/or make future share repurchases. Q4, 2024
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 | $5.30B | 7.95 | 14.09% | 2.07% | 4.33% | 10.21% | |
79 Outperform | $6.20B | 8.69 | 15.12% | 1.94% | 4.64% | 15.36% | |
78 Outperform | $4.61B | 8.72 | 13.22% | 2.99% | 2.95% | 4.08% | |
78 Outperform | $6.00B | 8.66 | 13.29% | 2.00% | 9.87% | 3.41% | |
78 Outperform | $3.02B | 8.13 | 17.38% | ― | 11.61% | 14.35% | |
66 Neutral | $6.09B | 39.07 | 3.23% | 3.86% | 0.96% | -27.04% | |
64 Neutral | $12.66B | 9.79 | 7.67% | 17015.07% | 12.23% | -6.06% |
* Financial Sector Average
Performance Comparison
MTG
MGIC Investment
26.13
6.17
30.91%
FAF
First American Financial
55.43
3.00
5.72%
RDN
Radian Group
33.66
3.67
12.24%
ESNT
Essent Group
57.81
3.21
5.88%
NMIH
NMI Holdings
37.77
5.20
15.97%
ACT
Enact Holdings
35.33
5.52
18.52%
MGIC Investment Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: 5.41%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
MGIC's first quarter results were marked by strong financial performance and significant capital returns to shareholders, but growth in insurance in force remains constrained by market conditions. Economic uncertainties and housing affordability challenges were noted, but the company's financial health and strategic initiatives reflect resilience.Q1-2025 Updates
Positive Updates
Strong Financial Performance
MGIC reported a net income of $186 million for the first quarter, with an annualized return on equity of 14.3%.
Capital Return to Shareholders
MGIC returned $224 million to shareholders through share repurchases in the first quarter and paid a quarterly common stock dividend of $33 million.
Favorable Loss Reserve Development
The reestimation of ultimate losses on prior delinquencies resulted in $50 million of favorable loss reserve development in the quarter.
Stable Insurance in Force
Insurance in force ended the quarter at $294 billion with an annual persistency rate of 85%.
Strong Liquidity Position
The holding company ended the quarter with $824 million in liquidity.
New Share Repurchase Program
The Board approved an additional $750 million share repurchase program and a $0.13 per share common stock dividend payable on May 21.
Negative Updates
Constrained Growth in Insurance in Force
Market conditions have constrained growth in insurance in force over the last few years, which is expected to persist this year.
Economic and Geopolitical Uncertainties
There are uncertainties around the current economic and geopolitical conditions, impacting future expectations.
Challenges in Housing Affordability
Housing affordability continues to pose challenges for homebuyers, although private mortgage insurance helps mitigate this.
Slight Increase in Delinquency Rate
The delinquency rate was 2.3%, which is 15 basis points higher than a year ago.
Company Guidance
During the first quarter of 2025, MGIC Investment Corporation provided substantial guidance on their financial performance and capital management strategies. They reported a net income of $186 million, reflecting a robust annualized return on equity of 14.3%. MGIC wrote $10 billion of new insurance, maintaining an insurance in force of $294 billion with an annual persistency rate of 85%. Throughout the quarter, the company repurchased 9.2 million shares totaling $224 million and distributed $33 million in common stock dividends, resulting in a combined payout of 107% of the net income over the prior four quarters. The holding company ended the quarter with $824 million in liquidity. Furthermore, MGIC announced an additional $750 million share repurchase program and a quarterly dividend of $0.13 per share. The company emphasized its disciplined approach to capital management, focusing on maintaining financial strength and flexibility, while acknowledging the potential impact of macroeconomic conditions. Overall, MGIC remains confident in its market leadership and its ability to sustain solid performance amid evolving economic landscapes.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.