For the first quarter the insurance provider posted earnings of 15 cents a share beating the Capital IQ Consensus Estimate of 11 cents a share by 4 cents. Revenue fell 12.7% from the year-ago quarter to $235.1 million, missing analysts' estimates of $242.35 million.
MGIC's primary insurance in force was $157.9 billion as of March 31, 2014, compared to $158.7 billion at Dec. 31, 2013, and $159.5 billion as of March 31, 2014. New insurance written in the first quarter was $5.2 billion, compared to $6.5 billion in the year-ago quarter.
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TheStreet Ratings team rates MGIC INVESTMENT CORP/WI as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate MGIC INVESTMENT CORP/WI (MTG) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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.
- You can view the full analysis from the report here: MTG Ratings Report