Zacks Investment Research Downgrades MGIC Investment (MTG) to Sell

MGIC Investment (NYSE:MTG) was downgraded by Zacks Investment Research from a “hold” rating to a “sell” rating in a report released on Wednesday, Zacks.com reports.

According to Zacks, “Competitive environment and pressure to maintain capital at the required level will dent MGIC Investment’s capital flexibility. Increase in debt level along with lower interest coverage ratio concerns. Further, increasing underwriting and other expenses weighs on margin expansion.  The company is set to report first quarter results on Apr 23. A Zacks Rank #4 and earnings EPS of 0.00% makes positive surprise prediction difficult. However, the company remains well poised to deliver improved earnings, banking on declining delinquency, lower claims payments and an improving housing market. A decline in loss and claims will solidify the company’s balance sheet and improve its financial profile. This apart, the company remains focused on enhancing its shareholder value. Also, positive credit trends, increasing persistency as well as a low expense ratio are tailwinds. Shares of MGIC Investment have outperformed the industry year to date.”

Separately, ValuEngine cut MGIC Investment from a “hold” rating to a “sell” rating in a research report on Thursday, March 7th. Three research analysts have rated the stock with a sell rating, two have given a hold rating and six have issued a buy rating to the company’s stock. The company has a consensus rating of “Hold” and an average target price of $16.05.

Shares of NYSE:MTG opened at $13.75 on Wednesday. MGIC Investment has a 52-week low of $9.41 and a 52-week high of $14.14. The company has a market capitalization of $4.89 billion, a P/E ratio of 7.72, a PEG ratio of 1.75 and a beta of 1.79. The company has a current ratio of 0.27, a quick ratio of 0.27 and a debt-to-equity ratio of 0.23.

MGIC Investment (NYSE:MTG) last announced its earnings results on Thursday, January 17th. The insurance provider reported $0.42 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.39 by $0.03. The business had revenue of $285.60 million for the quarter, compared to analysts’ expectations of $286.42 million. MGIC Investment had a return on equity of 19.64% and a net margin of 59.63%. The business’s revenue for the quarter was up 5.2% on a year-over-year basis. During the same quarter last year, the firm earned $0.43 EPS. As a group, equities research analysts predict that MGIC Investment will post 1.58 earnings per share for the current fiscal year.

MGIC Investment announced that its Board of Directors has initiated a stock repurchase plan on Wednesday, March 20th that authorizes the company to buyback $200.00 million in outstanding shares. This buyback authorization authorizes the insurance provider to reacquire up to 4.3% of its shares through open market purchases. Shares buyback plans are often a sign that the company’s management believes its shares are undervalued.

Hedge funds and other institutional investors have recently made changes to their positions in the business. PNC Financial Services Group Inc. boosted its position in MGIC Investment by 3,345.0% during the 4th quarter. PNC Financial Services Group Inc. now owns 3,445 shares of the insurance provider’s stock valued at $36,000 after acquiring an additional 3,345 shares in the last quarter. FNY Investment Advisers LLC bought a new stake in MGIC Investment during the 4th quarter valued at $37,000. Toronto Dominion Bank bought a new stake in MGIC Investment during the 4th quarter valued at $77,000. Nisa Investment Advisors LLC boosted its position in MGIC Investment by 371.5% during the 4th quarter. Nisa Investment Advisors LLC now owns 7,615 shares of the insurance provider’s stock valued at $80,000 after acquiring an additional 6,000 shares in the last quarter. Finally, Ffcm LLC boosted its position in MGIC Investment by 2,241.6% during the 4th quarter. Ffcm LLC now owns 9,390 shares of the insurance provider’s stock valued at $98,000 after acquiring an additional 8,989 shares in the last quarter. 94.09% of the stock is currently owned by institutional investors and hedge funds.

About MGIC Investment

MGIC Investment Corporation, through its subsidiaries, provides private mortgage insurance, other mortgage credit risk management solutions, and ancillary services to lenders and government sponsored entities in the United States. The company offers primary mortgage insurance that provides mortgage default protection on individual loans, as well as covers unpaid loan principal, delinquent interest, and various expenses associated with the default and subsequent foreclosure.

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