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Why MBIA (MBI) Is Rising Today

NEW YORK (TheStreet) -- MBIA (MBI) was gaining 8% to $14.39 Tuesday after greatly exceeding analysts' earnings estimates for the fourth quarter.

The insurance company posted earnings of 68 cents a share for the fourth quarter. That's 62 cents higher than the 6 cents a share analysts surveyed by Thomson Reuters expected for the quarter. MBIA posted revenue of $109 million for the quarter, beating analysts' estimates of $102.2 million.

"During 2013, we made very substantial progress towards moving beyond the effects of the financial crisis," MBIA president and CFO Chuck Chaplin said in a statement.

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TheStreet Ratings team rates MBIA INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate MBIA INC (MBI) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MBI's very impressive revenue growth greatly exceeded the industry average of 19.1%. Since the same quarter one year prior, revenues leaped by 83.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 1575.00% and other important driving factors, this stock has surged by 34.36% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • MBIA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, MBIA INC turned its bottom line around by earning $6.33 versus -$6.67 in the prior year. For the next year, the market is expecting a contraction of 91.0% in earnings ($0.57 versus $6.33).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Insurance industry average, but is greater than that of the S&P 500. The net income increased by 1785.7% when compared to the same quarter one year prior, rising from $7.00 million to $132.00 million.
  • The debt-to-equity ratio is very high at 2.95 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • You can view the full analysis from the report here: MBI Ratings Report

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