A month has gone by since the last earnings report for MGIC Investment (MTG). Shares have added about 8.7% in that time frame, outperforming the S&P 500.

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

MGIC Investment Q3 Earnings Surpass Estimates on Higher Revenues

MGIC Investment reported third-quarter 2024 operating net income per share of 77 cents, which beat the Zacks Consensus Estimate by 15%. Moreover, the bottom line increased 20.3% year over year.

The quarterly results reflected higher new insurance written and improved net investment income, partially offset by lower insurance in force.

MGIC Investment recorded total operating revenues of $306 million, which increased 3% year over year on higher net investment income, net premiums earned and other revenues. The top line matched the consensus mark.

Operational Update

Insurance in force decreased 0.5% from the prior-year quarter to $292.8 billion. The figure matched the Zacks Consensus Estimate as well as our estimate.

The insurer witnessed a 1.5% increase in primary delinquency to 25,089 loans.

Net premiums written decreased 0.2% year over year to $234 million. The figure was lower than our estimate of $237.3 million.

Net investment income increased 12.1% year over year to $62 million. Our estimate was $64.5 million. The Zacks Consensus Estimate was pegged at $64 million.

Persistency — the percentage of insurance remaining in force from one year prior — was 85.3%   as of Sept. 30, 2024, down from 86.3% in the year-ago quarter.

New insurance written was $17.2 billion, up 17.8% year over year.

Net underwriting and other expenses totaled $53.3 million, up 0.6% year over year.

For the quarter under review, the loss ratio was 4% compared with 0% for the third quarter of 2023.

Financial Update

Book value per share, a measure of net worth, increased 19% year over year to $20.66 as of Sept. 30, 2024.

Shareholder equity was $5.3 billion as of Sept. 30, 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 Sept. 30, 2024, up 2.1% from 2023-end. Debt was $644 million as of Sept. 30, 2024, up 0.1% from the 2023-end level.

Capital Deployment

The company bought back 5.2 million shares in the third quarter for $122.9 million. 

In the 12 months ended Sept. 30, 2024, MGIC Investment paid $650 million in dividends to the holding company.

In October, MTG repurchased an additional 2.9 million shares for $72.4 million.

The board also declared a dividend of 13 cents per share to shareholders to be paid on Nov. 21, 2024, to shareholders of record as of Nov. 7, 2024.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, MGIC has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. 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 broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, MGIC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

MGIC belongs to the Zacks Insurance - Multi line industry. Another stock from the same industry, Prudential (PRU), has gained 5.8% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.

Prudential reported revenues of $19.48 billion in the last reported quarter, representing a year-over-year change of +92.4%. EPS of $3.48 for the same period compares with $3.44 a year ago.

For the current quarter, Prudential is expected to post earnings of $3.36 per share, indicating a change of +30.2% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.2% over the last 30 days.

Prudential has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

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