Shares of MGIC Investment Corporation (MTG) have surged 23.8% year-to-date, significantly outperforming the industry, finance sector, and the broader market. This performance reflects the company’s strong fundamentals and its position as a leading mortgage insurer. MTG boasts a market capitalization of $6.2 billion, with an average daily trading volume of 1.7 million shares.
Several key factors underpin MTG’s impressive performance. Notably, the company has witnessed a steady increase in its insurance-in-force portfolio, fueled by new business and rising persistency rates. The improving housing market, characterized by higher new and existing home sales, increased cash purchases, and robust refinance activity, provides a favorable backdrop for MTG’s growth. Moreover, a decline in loss and claims payments, attributed to a lower delinquency rate, has strengthened the company’s balance sheet and improved its financial profile.
MTG’s prudent capital management strategy further enhances its appeal. The company has strategically deployed capital through reinsurance transactions, cash contributions, and dividend hikes, strengthening its capital position and supporting shareholder returns. MTG has consistently increased its quarterly dividend for four consecutive years, reflecting its confidence in its long-term prospects. The company’s share repurchase activity further underlines its commitment to enhancing shareholder value.
The Zacks Consensus Estimate projects earnings growth of 6.7% in 2024, driven by an anticipated 4.7% increase in revenues. Furthermore, the consensus estimate for 2025 earnings per share suggests a 0.7% growth on 4.7% higher revenues. The long-term earnings growth rate is expected to be 6.8%. Analyst sentiment has been positive, with the consensus estimates for 2024 and 2025 earnings moving north in the past 30 days, indicating a bullish outlook.
Other Stocks to Consider
For investors seeking exposure to the insurance industry, other companies worth exploring include CNO Financial Group (CNO), Enact Holdings (ACT), and Kemper Corporation (KMPR), all of which carry a Zacks Rank #1 (Strong Buy).
CNO Financial has a solid earnings history, exceeding estimates in three of the last four quarters. The company is projected to see year-over-year earnings growth of 11% in 2024 and 6.2% in 2025. Enact Holdings has a consistent track record of exceeding earnings estimates, with its stock surging 18% year-to-date. The company anticipates modest earnings growth of 1% in both 2024 and 2025.
Kemper Corporation has a mixed earnings history, but its stock has surged 28.6% this year. The company’s earnings are projected to surge 796.6% in 2024 and 14.6% in 2025, reflecting its strong growth potential.
