MGIC Investment Corporation’s MTG shares have risen 33.2% in the past year compared with the industry's growth of 0.04%. The Finance sector has grown 7.9% and the Zacks S&P 500 Index has gained 15.7% in the said time frame. With a market capitalization of $4.84 billion, the average volume of shares traded in the last three months was 1.7 million.

Image Source: Zacks Investment Research

The rally was largely driven by higher insurance in force, a decline in loss and claims payments, lower delinquency, better housing market fundamentals and prudent capital deployment.

This multi-line insurer carries a Zacks Rank #3 (Hold) at present. The company’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 12.57%.

Will the Bull Run Continue?

The Zacks Consensus Estimate for 2023 and 2024 revenues is pegged at $1.19 billion and $1.28 billion, respectively, indicating a year-over-year increase of 0.5% and 7.4%.

MTG’s return on equity for the trailing 12 months is 15.2%, better than the industry’s average of 13.1%. This reflects efficiency in utilizing shareholders’ funds.

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 company’s financial profile.

This largest private mortgage insurer in the United States has been improving its capital position by banking on capital contribution, reinsurance transaction and cash position. Both leverage and times interest earned ratio 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, MGIC Investment repurchased shares for $217.8 million in the nine months ended Sep 30, 2023. As of the same date, the company had $396 million remaining under a $500 million share repurchase program approved by the board in 2023 that expires on Jul 1, 2025.

The Zacks Consensus Estimate for 2023 earnings has moved north 0.8% in the past 30 days, reflecting analysts’ optimism.