MGIC Investment Corporation MTG is well-poised for growth on the back of solid insurance in force, a decline in loss and claims payments, lower delinquency, better housing market fundamentals and prudent capital deployment.

Growth Projections

The Zacks Consensus Estimate for MGIC Investment’s 2025 earnings is pegged at $2.53 per share, indicating a 4.2% increase from the year-ago reported figure on 4.6% higher revenues of $1.30 billion.

Earnings Surprise History

MGIC Investment has a decent surprise history, beating earnings estimates in each of the last four quarters, the average surprise being 14.84%.

Northbound Estimate Revision

The Zacks Consensus Estimate for 2024 and 2025 earnings has moved up nearly 2.1% and 1.2%, respectively, in the past 30 days, reflecting investors’ optimism.

Zacks Rank & Price Performance

MGIC Investment currently carries a Zacks Rank #2 (Buy). Over the past year, the stock has gained 44.6% compared with the industry’s growth of 5.6%.

Image Source: Zacks Investment Research

Attractive Valuation

MTG shares are trading at a discount than the industry average. Its price-to-book value of 1.09X is lower than the industry average of 2.73X. Before the valuation expands, it is preferable to take a position in the stock.

MGIC Investment has an impressive Value Score of B. Value stocks have a long history of showing superior returns. Back-tested results have shown that stocks with a Value Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or 2, offer better returns.

Business Tailwinds

MGIC Investment has been witnessing an increase in new business written. The insurer expects new business, combined with increasing annual persistency, to result in the continued growth of the insurance-in-force portfolio.

MTG has been witnessing a declining pattern of claim filings. Thus, paid claims are likely to decrease further. A decline in loss and claims will strengthen the balance sheet and hence improve the insurer’s financial profile.

Banking on capital contribution, reinsurance transaction and cash position, this largest private mortgage insurer in the United States has been improving its capital position. Both leverage and times interest earned ratios have been improving.

The multi-line insurer has been seeing improving housing market fundamentals, such as household formations, home sales and the current capital 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 enable the insurer to serve much more efficiently in the future.

Riding on a solid capital position, the company repurchased shares for $340.8 million and another $34 million through Jan 26, 2024. As of the same date, the company had $240 million remaining under a $500 million share repurchase program approved by the board in 2023, which will expire on Jul 1, 2025. Consistent with the last quarter, the recent share repurchase activity reflects continued strong mortgage credit performance and financial results and share price valuation levels that are expected to generate long-term value for remaining shareholders.