Dj Ibd: Mgic Investment Gets Technical Rating Upgrade

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The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

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How Style Scores Work with the Zacks Rank

A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.

It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

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As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.

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Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: MGIC Investment (MTG)

Based in Milwaukee, WI, and formed in 1957, MGIC Investment Corp. is the parent company of Mortgage Guaranty Insurance Corporation, the largest private mortgage insurer in the United States. It established the private mortgage insurance (PMI) industry to provide a private market alternative to federal government insurance programs for families wanting to buy a home with less than a 20% down payment. With a focus on sustainable homeownership, MGIC Investment provides a critical component of the country's residential mortgage finance system by protecting mortgage investors from credit losses.

MTG is a #3 (Hold) on the Zacks Rank, with a VGM Score of B.

It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 8.72; value investors should take notice.

For fiscal 2024, two analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.05 to $2.81 per share. MTG boasts an average earnings surprise of 16.3%.

With a solid Zacks Rank and top-tier Value and VGM Style Scores, MTG should be on investors' short list.

Zacks Investment Research

MGIC Investment Corporation MTG reported third-quarter 2024 operating net income per share of 77 cents, which beat the Zacks Consensus Estimate by 15%. Moreover, the bottom line increased 20.3% year over year.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

The quarterly results reflected higher new insurance written and improved net investment income, partially offset by lower insurance in force.

MGIC Investment recorded total operating revenues of $306 million, which increased 3% year over year on higher net investment income, net premiums earned and other revenues. The top line matched the consensus mark.

MGIC Investment Corporation Price, Consensus and EPS Surprise

MGIC Investment Corporation price-consensus-eps-surprise-chart | MGIC Investment Corporation Quote

Operational Update

Insurance in force decreased 0.5% from the prior-year quarter to $292.8 billion. The figure matched the Zacks Consensus Estimate as well as our estimate.

The insurer witnessed a 1.5% increase in primary delinquency to 25,089 loans.

Net premiums written decreased 0.2% year over year to $234 million. The figure was lower than our estimate of $237.3 million.

Net investment income increased 12.1% year over year to $62 million. Our estimate was $64.5 million. The Zacks Consensus Estimate was pegged at $64 million.

Persistency — the percentage of insurance remaining in force from one year prior — was 85.3% as of Sept. 30, 2024, down from 86.3% in the year-ago quarter.

New insurance written was $17.2 billion, up 17.8% year over year.

Net underwriting and other expenses totaled $53.3 million, up 0.6% year over year.

For the quarter under review, the loss ratio was 4% compared with 0% for the third quarter of 2023.

Financial Update

Book value per share, a measure of net worth, increased 19% year over year to $20.66 as of Sept. 30, 2024.

Shareholder equity was $5.3 billion as of Sept. 30, 2024, up 4.3% from 2023-end.

MGIC Investment's PMIERs Available Assets totaled $6 billion, or $2.5 billion above its Minimum Required Assets as of Sept. 30, 2024.

Assets were $6.7 billion as of Sept. 30, 2024, up 2.1% from 2023-end. Debt was $644 million as of Sept. 30, 2024, up 0.1% from the 2023-end level.

Capital Deployment

The company bought back 5.2 million shares in the third quarter for $122.9 million.

In the 12 months ended Sept. 30, 2024, MGIC Investment paid $650 million in dividends to the holding company.

In October, MTG repurchased an additional 2.9 million shares for $72.4 million.

The board also declared a dividend of 13 cents per share to shareholders to be paid on Nov. 21, 2024, to shareholders of record as of Nov. 7, 2024.

Zacks Rank

MGIC Investment currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Some Other Multi-Line Insurers

The Hartford Financial Services Group, Inc. HIG reported third-quarter 2024 adjusted operating earnings of $2.53 per share, which beat the Zacks Consensus Estimate by 1.6%. The bottom line increased 10.5% year over year. Operating revenues of HIG amounted to $4.7 billion, which improved 10.9% year over year in the quarter under review. The top line beat the consensus mark by 1.1%. Earned premiums of Hartford Financial rose 8% year over year to $5.7 billion in the third quarter but missed the Zacks Consensus Estimate by 0.4%. The metric was driven by a 10.7% and 1.6% year-over-year rise in P&C and Group Benefits’ earned premiums, respectively.

Pre-tax net investment income of $659 million grew 10% year over year and beat the consensus mark by 5.9%. Total benefits, losses and expenses increased 8.3% year over year to $5.8 billion in the quarter under review. Pretax income of $952 million increased 17.1% year over year in the third quarter.

Prudential Financial, Inc. PRU reported third-quarter 2024 adjusted operating income of $3.48 per share, which beat the Zacks Consensus Estimate by 0.2%. However, the bottom line decreased 3.8% year over year. Total revenues of $19.5 billion surged 94% year over year and beat the Zacks Consensus Estimate by 33.7%. Total benefits and expenses amounted to $17.8 billion, which doubled year over year in the third quarter.

Prudential Global Investment Management’s (PGIM) adjusted operating income of $241 million in the reported quarter increased 14.2% year over year. The figure was higher than our estimate of $221.4 million. The Zacks Consensus Estimate was $223 million. PGIM assets under management of $1.400 trillion increased 15% year over year. The U.S. Businesses delivered an adjusted operating income of $1.108 billion, which increased 1.8% year over year. The figure was higher than both Zacks Consensus Estimate and our estimate of $1 billion. International Businesses adjusted operating income decreased 5.5% year over year to $766 million in the third quarter.

Everest Group, Ltd.’s EG third-quarter 2024 operating income of $14.62 per share missed the Zacks Consensus Estimate by 22.7%. The bottom line jumped 3.4% year over year. Everest Group’s total operating revenues of $4.3 billion climbed 6.5% year over year on higher premiums earned and net investment income. The top line however missed the consensus mark by 4.4%.

Gross written premiums improved 0.8% year over year to $4.2 billion, driven by 1.7% growth in Reinsurance, partially offset by a 2.1% decline in Insurance. Our estimate was $5.3 billion. Net investment income was $496 million, which surged 22.2% year over year. Our estimate was $412 million. The Zacks Consensus Estimate was pegged at $478 million. Total claims and expenses rose 13.5% to $3.7 billion. Our estimate was $3.9 billion. Underwriting income was $272 million, which declined 9.6% year over year.

Zacks Investment Research