We expect private mortgage insurer
MGIC Investment Corp.
) to beat expectations when it reports fourth-quarter 2014
results on Jan 23, 2014.
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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
Positive Zacks ESP:
Earnings Surprise Prediction or
, 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
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
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
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.
), earnings ESP of +4.5% and a Zacks Rank #1(Strong Buy).
Prudential Financial Inc.
), earnings ESP of +0.45% and a Zacks Rank #1..
), earnings ESP of +21.7% and a Zacks Rank # 2 (Buy).