MGIC Investment Trades Near 52-Week High: Time to Hold the Stock?

Core Insights - MGIC Investment Corporation (MTG) shares closed at $28.38, near its 52-week high of $29.01, indicating strong investor confidence and potential for further price appreciation [1] - The stock is trading above its 50-day and 200-day simple moving averages, suggesting solid upward momentum [1] Market Performance - MTG has a market capitalization of $6.54 billion, with an average trading volume of 1.83 million shares over the last three months [2] - Year-to-date, MTG shares have gained 19.7%, outperforming the Finance sector's growth of 13.2% and the Zacks S&P 500 composite's growth of 17.6% [3] - Compared to peers like Assurant, Inc. (AIZ), Horace Mann Educators Corporation (HMN), and Radian Group Inc. (RDN), which gained 7.2%, 17.4%, and 12% respectively, MTG has shown superior performance [4] Growth Drivers - MTG anticipates stronger insurance-in-force growth driven by new business and solid persistency, supported by higher home sales, increased cash purchases, and improved refinancing activity [7] - The company has a capital strength that allows for significant share buybacks, with $614 million authorized through 2027 [7] Valuation Metrics - MGIC Investment shares are trading at a price-to-book value of 1.23X, lower than the industry average of 2.24X, indicating a better entry point for investors [8] - The stock has a Value Score of B, highlighting its attractiveness as a value stock [8] Financial Performance - MTG's return on invested capital (ROIC) has been increasing, currently at 11%, significantly higher than the industry average of 2% [9] - Earnings have grown by 12% over the past five years, outperforming the industry average of 9.8% [11] - The company has consistently surpassed earnings estimates, with an average surprise of 14.21% over the last four quarters [12] Analyst Sentiment - Analysts have raised earnings estimates for MTG for 2025 and 2026, with the Zacks Consensus Estimate for 2025 earnings moving up by 3.6% [13] Future Projections - The Zacks Consensus Estimate for MGIC Investment's 2025 earnings per share indicates a year-over-year increase of 7.2%, with revenues projected at $1.22 billion, reflecting a 0.4% improvement [10] - For 2026, earnings and revenues are expected to increase by 0.4% and 2.6%, respectively, compared to 2025 estimates [10] Risk Management - MGIC Investment is experiencing a decline in claim filings, which is expected to strengthen its balance sheet and improve its financial profile [14] - The company is enhancing its capital position through capital contributions and reinsurance transactions [15] Shareholder Value - MTG's capital strength supports wealth distribution through share buybacks, reflecting strong mortgage credit performance [16] - The company is focused on growth through higher premiums, outstanding credit quality, and new business initiatives [17] - Solid growth projections and attractive valuations are expected to benefit MGIC Investment in the long term [18]