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MGIC Investment (MTG)
NYSE:MTG
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MGIC Investment
(NYSE:MTG)
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Rating:77Outperform
Price Target:
$33.00
▲(16.24% Upside)
MGIC Investment's strong financial performance and effective capital management are the most significant factors contributing to its high score. The stock's bullish technical indicators and low valuation further enhance its attractiveness. However, potential challenges in the housing market and flat investment income slightly temper the overall outlook.
Positive Factors
Strong Financial Health
MGIC's debt-free status enhances financial security, allowing for greater flexibility in operations and strategic investments, supporting long-term growth.
Effective Capital Management
Strategic share repurchases and dividends reflect strong capital management, enhancing shareholder value and demonstrating confidence in future performance.
High Persistency Rates
High persistency rates indicate customer retention and stability, suggesting a reliable revenue stream and strong market position in the mortgage insurance sector.
Negative Factors
Challenges in Housing Market
Slowing home sales due to high interest rates and affordability issues could limit growth in MGIC's insurance in force, impacting future revenue potential.
Flat Investment Income
Flat investment income suggests limited growth in this revenue stream, potentially affecting overall profitability if other income sources do not compensate.
Potential Increase in Delinquency Rates
Rising delinquency rates could increase claims, affecting MGIC's profitability and necessitating higher reserves, impacting financial performance.
MGIC Investment (MTG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.57B
Dividend Yield1.9%
Average Volume (3M)2.12M
Price to Earnings (P/E)9.3
Beta (1Y)0.69
Revenue Growth3.26%
EPS Growth12.70%
CountryUS
Employees555
SectorFinancial
Sector Strength70
IndustryInsurance - Specialty
Share Statistics
EPS (TTM)0.82
Shares Outstanding230,523,010
10 Day Avg. Volume3,208,398
30 Day Avg. Volume2,115,072
Financial Highlights & Ratios
PEG Ratio0.51
Price to Book (P/B)1.20
Price to Sales (P/S)5.14
P/FCF Ratio8.57
Enterprise Value/Market Cap1.11
Enterprise Value/Revenue5.97
Enterprise Value/Gross Profit6.34
Enterprise Value/Ebitda9.42
Forecast
1Y Price Target
$28.60Price Target Upside0.74% Upside
Rating ConsensusHold
Number of Analyst Covering5
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 generates revenue primarily through the sale of mortgage insurance premiums. When a lender issues a mortgage that exceeds a certain loan-to-value ratio, they may require the borrower to obtain mortgage insurance to mitigate the risk of default. MGIC charges these lenders premiums for coverage, which can be collected as a one-time upfront payment or as monthly installments throughout the life of the loan. Additionally, MGIC earns income through investment returns on its reserves and capital, which are allocated to cover potential future claims. The company may also engage in reinsurance arrangements or partnerships with other financial institutions to share risk and enhance its offerings. The stability of MGIC's revenue model is significantly influenced by housing market conditions, interest rates, and regulatory changes affecting the mortgage industry.
MGIC Investment Earnings Call Summary
Earnings Call Date:Jul 30, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Neutral
MGIC's earnings call presented a strong financial performance with significant share repurchases and dividends, alongside a stable insurance portfolio. However, they face challenges in the housing market and investment income stagnation, with potential increases in delinquency rates due to economic factors.Q2-2025 Updates
Positive Updates
Strong Financial Performance
MGIC reported a net income of $193 million with an annualized return on equity of 15%, reflecting disciplined market approaches and risk management strategies.
High Persistency and Insurance in Force
The insurance in force remained at $297 billion with an annual persistency of 85%, indicating stability and alignment with expectations.
Effective Capital Management
MGIC repurchased 7.1 million shares for $181 million and paid $31 million in dividends, with a total payout of 112% on net income over the last four quarters.
Strong Credit Performance
The portfolio exhibited strong credit characteristics, with favorable loss reserve developments of $54 million due to higher-than-expected cure rates on delinquencies.
Increase in Book Value
Book value per share increased by 13% year-over-year to $22.11.
Negative Updates
Challenges in Housing Market
Elevated interest rates and affordability challenges are causing a slowdown in home sales, limiting growth in insurance in force.
Flat Investment Income
Net investment income remained flat at $61 million, with overall book yield expectations to remain flat due to a decline in short-term interest rates and capital return levels.
Potential Increase in Delinquency Rates
While the delinquency rate decreased to 2.21%, forecasts suggest an increase in delinquency rates in the second half of the year due to seasonality and aging of 2021 and 2022 vintages.
Operational Expense Challenges
Operating expenses included a $4 million accounting charge related to pension plan settlements, with expectations of further charges in the future.
Company Guidance
During the MGIC Investment Corporation's second quarter 2025 earnings call, guidance highlighted several key financial metrics and strategic priorities. The company reported a net income of $193 million, with an annualized return on equity of 15%. New insurance written during the quarter amounted to $16 billion, while insurance in force totaled $297 billion, maintaining an annual persistency rate of 85%. MGIC executed share repurchases totaling 7.1 million shares for $181 million and paid a quarterly common stock dividend of $0.13 per share, amounting to $31 million. Over the last four quarters, these shareholder returns represented a 112% payout of net income. The guidance also reiterated the intent to continue using share repurchases as the primary method of returning capital to shareholders. Moreover, the company's book value per share rose to $22.11, an increase of 13% year-over-year. MGIC's operating expenses were reported at $52 million for the quarter, and the fiscal guidance for the full year remains at $195 million to $205 million. The company discussed its strategic focus on maintaining strong capital and risk management strategies, including reinsurance to reduce volatility and enhance financial resilience.MGIC Investment Financial Statement Overview
Summary
MGIC Investment shows strong financial health with consistent revenue growth and high profitability. The balance sheet is extremely stable with no debt, enhancing financial security. Cash flow metrics indicate robust cash generation capabilities. However, the absence of EBIT and EBITDA metrics for the latest period slightly limits the assessment 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 | 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 | 1.15B | 1.21B | 929.10M | 936.09M | 987.23M | 1.02B |
| EBITDA | 771.80M | 1.00B | 974.36M | 1.19B | 939.15M | 676.67M |
| Net Income | 762.61M | 762.99M | 712.95M | 865.35M | 634.98M | 446.09M |
Balance Sheet | ||||||
| Total Assets | 6.49B | 6.55B | 6.54B | 6.21B | 7.33B | 7.35B |
| Cash, Cash Equivalents and Short-Term Investments | 298.89M | 6.08B | 363.67M | 327.38M | 284.69M | 287.95M |
| Total Debt | 645.40M | 644.67M | 643.20M | 662.81M | 1.15B | 1.24B |
| Total Liabilities | 1.33B | 1.36B | 1.47B | 1.57B | 1.15B | 1.24B |
| Stockholders Equity | 5.15B | 5.17B | 5.07B | 4.64B | 4.86B | 4.70B |
Cash Flow | ||||||
| Free Cash Flow | 770.86M | 723.86M | 710.96M | 646.76M | 692.20M | 729.00M |
| Operating Cash Flow | 771.90M | 725.03M | 712.96M | 650.01M | 696.32M | 732.31M |
| Investing Cash Flow | 119.19M | -142.00M | -179.19M | 410.49M | -160.75M | -772.51M |
| Financing Cash Flow | -880.01M | -719.04M | -496.04M | -1.03B | -527.29M | 167.82M |
MGIC Investment Technical Analysis
Positive
28.39
Price Trends
27.28
Positive
26.87
Positive
25.38
Positive
Market Momentum
0.25
Positive
56.27
Neutral
51.25
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 28.39 is above the 20-day moving average (MA) of 28.23, above the 50-day MA of 27.28, and above the 200-day MA of 25.38, indicating a bullish trend. The MACD of 0.25 indicates Positive momentum. The RSI at 56.27 is Neutral, neither overbought nor oversold. The STOCH value of 51.25 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 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 (68)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
84 Outperform | 5.71B | 8.79 | 13.77% | 2.04% | 3.15% | 5.70% | |
81 Outperform | 6.34B | 9.38 | 12.60% | 1.88% | 4.79% | -0.76% | |
81 Outperform | 3.07B | 8.31 | 15.61% | ― | 9.99% | 11.47% | |
78 Outperform | 4.92B | 9.15 | ― | 2.76% | 0.24% | 3.14% | |
77 Outperform | $6.57B | 9.35 | 14.85% | 1.90% | 3.26% | 12.70% | |
65 Neutral | 6.64B | 36.04 | 3.68% | 3.38% | 14.28% | -2.87% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
* Financial Sector Average
Performance Comparison
MTG
MGIC Investment
28.39
3.54
14.25%
FAF
First American Financial
64.25
1.57
2.50%
RDN
Radian Group
36.65
3.00
8.92%
ESNT
Essent Group
64.27
2.23
3.59%
NMIH
NMI Holdings
39.15
-1.70
-4.16%
ACT
Enact Holdings
38.69
3.19
8.99%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.