MGIC Investment (MTG) Weak On High Volume

Trade-Ideas LLC identified MGIC Investment ( MTG) as a weak on high relative volume 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 $43.3 million.
  • MTG has traded 567,646 shares today.
  • MTG is trading at 2.39 times the normal volume for the stock at this time of day.
  • MTG is trading at a new low 5.05% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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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 2. Currently there are 3 analysts that rate MGIC Investment a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for MGIC Investment has been 6.0 million shares per day over the past 30 days. MGIC Investment has a market cap of $2.0 billion and is part of the financial sector and insurance industry. The stock has a beta of 1.92 and a short float of 6.3% with 2.67 days to cover. Shares are down 35% year-to-date as of the close of trading on Tuesday.

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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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