Today's Dead Cat Bounce Stock Is MGIC Investment (MTG)

Trade-Ideas LLC identified MGIC Investment ( MTG) as a "dead cat bounce" (down big yesterday but up big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified MGIC Investment 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 $49.1 million.
  • MTG has traded 83,304 shares today.
  • MTG is up 8.1% today.
  • MTG was down 7.6% yesterday.

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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. MTG has a PE ratio of 3. Currently there are 2 analysts that rate MGIC Investment a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for MGIC Investment has been 5.6 million shares per day over the past 30 days. MGIC Investment has a market cap of $2.2 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.88 and a short float of 6.3% with 2.55 days to cover. Shares are down 33.3% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates MGIC Investment as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, attractive valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • 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 exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for MGIC INVESTMENT CORP/WI is rather high; currently it is at 56.44%. Regardless of MTG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, MTG's net profit margin of 26.75% compares favorably to the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income has significantly decreased by 48.0% when compared to the same quarter one year ago, falling from $133.08 million to $69.19 million.
  • Net operating cash flow has significantly decreased to -$56.53 million or 90.49% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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