NEW YORK (TheStreet) -- Shares of MGIC Investment Corp (MTG - Get Report) are gaining, up 5.05% to $10.41 on heavy volume in late morning trading Monday, after government-owned, mortgage-investment companies Fannie Mae (FNMA) and Freddie Mac (FMCC) issued final mortgage insurer guidelines late Friday.
The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, announced softened mortgage insurers' standards that eased capital requirements on some loans from 2005 through 2008, in cases where borrowers steadily met their commitments, Bloomberg reports.
The latest standards are meant to prevent a repeat of what happened after the financial crisis, when a collapse in home prices led many in the industry to go out of business, according to Bloomberg.
The rules are set to take effect at the end of the year.
About 5.98 million shares of MGIC Investment have exchanged hands as of 11:14 a.m. ET today, compared to its average trading volume of about 5.04 million shares a day.
Milwaukee, WI-based MGIC is a mortgage insurer with two principal mortgage subsidiaries, Mortgage Guaranty Insurance Corp and MGIC Indemnity Corp.
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 solid stock price performance, compelling growth in net income and notable return on equity. 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:
- This stock has managed to rise its share value by 24.35% over the past twelve months. 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 has shown improvement in its earnings for its most recently reported quarter when compared with the same quarter a year earlier. 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 turned its bottom line around by earning $0.64 versus -$0.23 in the prior year. This year, the market expects an improvement in earnings ($0.88 versus $0.64).
- Net operating cash flow has significantly increased by 75.50% to -$68.32 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 -193.31%.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 9.1%. Since the same quarter one year prior, revenues slightly dropped by 4.3%. 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