MGIC Stays Neutral - Analyst Blog
20 Settembre 2013 - 11:05PM
Zacks
We retain MGIC Investment Corp. (MTG) at
Neutral, following second quarter earnings results. Though the
company reported operating profit in the quarter and did
significantly well compared to the Zacks Consensus Estimate,
however, headwinds such as a low interest rates, lack of a robust
economic recovery and low premium origination keeps us on the
sidelines.
Why a Reiteration?
Counting on the positives, MGIC reported its first quarterly
profit since the second quarter of 2010 and the lowest incurred
loss ratio since the second quarter of 2007. Results were aided by
lower claim rate on early-stage delinquencies, combined with a
decreasing level of new notices.
An improving housing market, along with the outstanding credit
quality of the company’s new business and its industry's growing
share of business from the Federal Housing Authority (FHA), offers
an environment for gradual growth at MGIC.
On the tepid side MGIC’s net investment income has been under
pressure.
Though the quality of the new business written by the company
remains outstanding and the industry continues to grow its share of
new business, the absence of a meaningful economic recovery has
compelled the overall purchase origination market to be depressed.
This is limiting the company’s new business writings and is
resulting in restricted premiums written.
On Jul 23, MGIC reported second quarter 2013 operating profit
of 4 cents per share, miles ahead of the Zacks Consensus Estimate
of a loss of 16 cents per share. Results also rebounded from an
operating loss of $1.36 per share in the year-ago quarter.
MGIC witnessed rising earnings estimates. Over the last 60
days, the Zacks Consensus Estimate for 2013 narrowed to a loss of
46 cents per share from a loss of 72 cents per share as all the 5
estimates improved. For 2014 EPS estimates improved by 41% to 38
cents as 3 of 5 estimates were raised over the same time
frame.
MGIC carries a Zacks Rank #2 (Buy).
Other Stocks
Eastern Insurance Holdings, Inc. (EIHI) with
Zacks Rank #1 (Strong Buy), and CIGNA Corp. (CI),
Kemper Corp. (KMPR) both with Zacks Rank #2 ,
among others, are worth considering.
CIGNA CORP (CI): Free Stock Analysis Report
EASTERN INSURNC (EIHI): Free Stock Analysis Report
KEMPER CORP (KMPR): Free Stock Analysis Report
MGIC INVSTMT CP (MTG): Free Stock Analysis Report
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