MGIC Investment Corporation (NYSE:MTG) Just Reported First-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?

The first-quarter results for MGIC Investment Corporation (NYSE:MTG) were released last week, making it a good time to revisit its performance. Results look mixed - while revenue fell marginally short of analyst estimates at US$294m, statutory earnings beat expectations 4.6%, with MGIC Investment reporting profits of US$0.64 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for MGIC Investment

After the latest results, the four analysts covering MGIC Investment are now predicting revenues of US$1.21b in 2024. If met, this would reflect a reasonable 3.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to decrease 6.6% to US$2.54 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.22b and earnings per share (EPS) of US$2.47 in 2024. So the consensus seems to have become somewhat more optimistic on MGIC Investment's earnings potential following these results.

The consensus price target was unchanged at US$22.44, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values MGIC Investment at US$24.00 per share, while the most bearish prices it at US$20.00. This is a very narrow spread of estimates, implying either that MGIC Investment is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that MGIC Investment is forecast to grow faster in the future than it has in the past, with revenues expected to display 4.9% annualised growth until the end of 2024. If achieved, this would be a much better result than the 0.6% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 3.7% annually. Not only are MGIC Investment's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around MGIC Investment's earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$22.44, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple MGIC Investment analysts - going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for MGIC Investment you should be aware of, and 1 of them doesn't sit too well with us.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.