MTG - MGIC Investment: Limited Upside Given Earnings Are Likely Peaking
2024-07-08 23:02:49 ET
Summary
- MGIC Investment Corporation shares have risen by over 36% in the past year due to a strong housing market and employment conditions, all but eliminating losses.
- The company's earnings have increased, driven by higher interest rates and aggressive stock buybacks, leading to a 7.1% decline in share count.
- MGIC has been nearly a no-loss business due to low defaults and rising home prices, but may face slow and steady increases in policy losses in the future.
Shares of MGIC Investment Corporation ( MTG ) have been a strong performer over the past year, rising by over 36%, as the company has benefited from elevated home prices and strong employment. These factors have led to virtually nonexistent losses on its private mortgage insurance (PMI) policies. I last covered MGIC in February , downgrading shares to a “hold” with a fair value just below $22.50, as I felt their rally had turned the stock into a market performer. Since then, shares have returned about 12%, in-line with the S&P 500’s rise, consistent with a hold recommendation. With updated financials and some sluggishness in the housing market, now is an opportune time to revisit MTG....
MGIC Investment: Limited Upside Given Earnings Are Likely Peaking