Can MGIC Surprise This Earnings Season? - Analyst Blog

By
A A A

We expect private mortgage insurer MGIC Investment Corp. ( MTG ) to beat expectations when it reports fourth-quarter 2014 results on Jan 23, 2014.

Why a Likely Positive Surprise?

Our proven model shows that MGIC Investment is likely to beat earnings because it has the right combination of two key ingredients -

Positive Zacks ESP: Earnings Surprise Prediction or  Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at 50.0%. This is very meaningful and a leading indicator of a likely positive earnings surprise.

Zacks Rank #3 (Hold): Note that stocks with a Zacks Ranks  #1, 2 or 3 have a significantly higher chance of beating earnings. We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

The combination of MGIC Investment's Zacks Rank # 3 (Hold) and 50.0% ESP makes us very confident in looking for a positive earnings beat on Jan 23.

What is Driving the Better-than-Expected Earnings?

MGIC Investment has seen favorable operating trends driven by improvement in the housing market, lower delinquencies, lower claims paid and a pick-up in mortgage insurance demand.

The recovering demand for home purchases is consequently driving up demand for mortgage loan, reflected by strong new business written by MGIC Investment in the recent months. The company is also benefiting from regaining market share from the Federal Housing Authority.

Other Stocks to Consider

MGIC Investment is not the only firm looking up this earnings season. Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

FBL Financial Group Inc. ( FFG ), earnings ESP of +4.5% and a Zacks Rank #1(Strong Buy).

Prudential Financial Inc. ( PRU ), earnings ESP of +0.45% and a Zacks Rank #1..

Loews Corp. ( L ), earnings ESP of +21.7% and a Zacks Rank # 2 (Buy).



FBL FINL GRP-A (FFG): Free Stock Analysis Report

LOEWS CORP (L): Free Stock Analysis Report

MGIC INVSTMT CP (MTG): Free Stock Analysis Report

PRUDENTIAL FINL (PRU): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: FFG , L , MTG , PRU

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stuck
Stuck                               
Yoga Surfer
Yoga Surfer                         

Stocks

Referenced

0%
100%
100%
100%

Most Active by Volume

89,851,277
  • $17.05 ▲ 0.12%
61,694,953
  • $39.05 ▲ 1.03%
61,622,467
  • $102.64 ▲ 1.56%
56,476,509
  • $3.48 ▼ 1.14%
49,282,352
  • $5.31 ▲ 3.91%
37,301,083
  • $87.17 ▼ 3.03%
36,192,897
  • $78.29 ▲ 1.94%
33,401,171
  • $38.83 ▼ 1.89%
As of 9/23/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com