It has been about a month since the last earnings report for MGIC Investment (MTG). Shares have lost about 7.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is MGIC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

MGIC Investment Q4 Earnings Beat, Revenues Miss Estimates

MGIC Investment Corporation reported fourth-quarter 2024 operating net income per share of 72 cents, which beat the Zacks Consensus Estimate by 10.8%. Moreover, the bottom line increased 10.2% year over year. MGIC Investment recorded total operating revenues of $303.1 million, which increased 6.4% year over year on higher net investment income, net premiums earned and other revenues. The top line however missed the consensus mark by 1.1%.

Operational Update

Insurance in force increased 0.6% from the prior-year quarter to $295.4 billion. The Zacks Consensus Estimate was $294 billion. Our estimate was $293.6 billion. The insurer witnessed a 4.4% increase in primary delinquency to 26,791 loans. Net premiums written increased 5.9% year over year to $232.1 million. The figure was higher than our estimate of $231.1 million.

Net investment income increased 6.1% year over year to $61.3 million. Our estimate was $66.9 million. The Zacks Consensus Estimate was pegged at $65 million. Persistency — the percentage of insurance remaining in force from one year prior — was 84.8% as of Dec. 30, 2024, down from 86.1% in the year-ago quarter. New insurance written was $15.9 billion, up 45.9% year over year.

Total losses and expenses increased 23.3% year over year to $66.7 million. For the quarter under review, the loss ratio was 3.6% compared with negative 4.2% for the fourth quarter of 2023. Underwriting expense ratio was 20.8, marking an improvement of 380 basis points (bps) year over year.

Financial Update

Book value per share, a measure of net worth, increased 11.9% year over year to $20.82 as of Dec. 31, 2024. Shareholder equity was $5.3 billion as of Dec. 31, 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 Dec. 31, 2024, up 2.1% from 2023-end. Debt was $644 million as of Dec. 31, 2024, up 0.1% from the 2023-end level.

Capital Deployment

The company bought back 7.8 million shares in the fourth quarter for $193.3 million. MGIC Investment paid $200 million in dividends to the holding company and 13 cents per share to shareholders. In January, MTG repurchased an additional 3.5 million shares for $85.5 million. The board also declared a dividend of 13 cents per share to shareholders to be paid out on March 5, 2025, to shareholders of record as of Feb. 18, 2025.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

The consensus estimate has shifted 7.32% due to these changes.

VGM Scores

Currently, MGIC has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, MGIC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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