NEW YORK (TheStreet) -- Shares of private mortgage insurer MGIC Investment (MTG) - Get Report fell 7.36% to $8.31 in morning trading Wednesday amid a report that President Barack Obama would announce a 50 basis point cut in Federal Housing Administration premiums at an event in Phoenix on Thursday.
Bloomberg's Jonathan Allen and Clea Benson reported the news on Wednesday.
The 0.5% cut would be the first in several years and would reduce the premiums to 0.85%. Private mortgage insurers have benefited in recent years from the high FHA premiums.
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More than 13.6 million shares had changed hands as of 11:09 a.m., more than triple the daily average volume of 4,544,120.
Separately, TheStreet Ratings team rates MGIC INVESTMENT CORP/WI as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate MGIC INVESTMENT CORP/WI (MTG) 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 increase in stock price during the past year, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that revenues have generally been declining."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- MGIC INVESTMENT CORP/WI 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 two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, MGIC INVESTMENT CORP/WI continued to lose money by earning -$0.23 versus -$4.59 in the prior year. This year, the market expects an improvement in earnings ($0.57 versus -$0.23).
- Net operating cash flow has significantly increased by 67.76% to -$59.31 million when compared to the same quarter last year. In addition, MGIC INVESTMENT CORP/WI has also vastly surpassed the industry average cash flow growth rate of -21.38%.
- Despite the weak revenue results, MTG has outperformed against the industry average of 22.3%. Since the same quarter one year prior, revenues slightly dropped by 7.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: MTG Ratings Report