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Trade-Ideas: MGIC Investment Corporation (MTG) Is Today's Post-Market Leader Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified MGIC Investment Corporation ( MTG) as a post-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified MGIC Investment Corporation as such a stock due to the following factors:

  • MTG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $65.0 million.
  • MTG is up 2.3% today from today's close.

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More details on MTG:

MGIC Investment Corporation, through its subsidiaries, provides private mortgage insurance and ancillary services to lenders and government sponsored entities in the United States. Currently there are 4 analysts that rate MGIC Investment Corporation a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for MGIC Investment Corporation has been 6.1 million shares per day over the past 30 days. MGIC Investment has a market cap of $2.8 billion and is part of the financial sector and insurance industry. The stock has a beta of 3.86 and a short float of 11.8% with 5.19 days to cover. Shares are down 1.4% year-to-date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates MGIC Investment Corporation as a sell. Among the areas we feel are negative, one of the most important has been poor profit margins.

Highlights from the ratings report include:

  • The gross profit margin for MGIC INVESTMENT CORP/WI is currently extremely low, coming in at 12.94%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, MTG's net profit margin of -0.55% significantly underperformed when compared to the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, MGIC INVESTMENT CORP/WI's return on equity significantly trails that of both the industry average and the S&P 500.
  • The revenue fell significantly faster than the industry average of 26.6%. Since the same quarter one year prior, revenues fell by 32.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has increased to -$278.92 million or 29.58% when compared to the same quarter last year. Despite an increase in cash flow of 29.58%, MGIC INVESTMENT CORP/WI is still growing at a significantly lower rate than the industry average of 88.32%.
  • This stock has increased by 60.03% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in MTG do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.

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