MGIC Investment Earnings: Here’s Why Investors are Buying Shares Now

MGIC Investment Corp. (NYSE:MTG) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are up 10.94%.

MGIC Investment Corp. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased to $0.04 in the quarter versus EPS of $-1.49 in the year-earlier quarter.

Revenue: Decreased 17.81% to $263.9 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: MGIC Investment Corp. reported adjusted EPS income of $0.04 per share. By that measure, the company beat the mean analyst estimate of $-0.15. It missed the average revenue estimate of $266.24 million.

Quoting Management: Curt S. Culver, CEO and Chairman of the Board of Mortgage Guaranty Insurance Corporation (“MGIC”) and MTG, said that “I am pleased with the credit quality and performance of the new business we have written since 2009 and am happy to report that for the first half of 2013 we had a 45% increase, year over year, in the amount of new business.” He further said that he is “encouraged about the recent credit performance given that as of quarter end the number of delinquent loans decreased 24% year over year, and are at their lowest point in the last five years.” He added that “reflecting the lower level of foreclosures the number of claims received were down 29% year to date when compared to last year.”

Key Stats (on next page)…

Revenue decreased 1.97% from $269.19 million in the previous quarter. EPS increased to $0.04 in the quarter versus EPS of $-0.32 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a loss of $0.22 to a loss $0.23. For the current year, the average estimate has moved down from a loss of $0.75 to a loss of $0.82 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)

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