Shares of MGIC Investment Corporation MTG have lost 3.8% in the past year, underperforming the industry’s growth of 1.2%.
Weak housing conditions, slowing insurance growth, and rising unemployment are pressuring the insurer. However, strong capital levels, disciplined underwriting, and lower default rates could support recovery if housing activity and interest rates stabilize.
Meanwhile, some of its other peers include Enact Holdings, Inc. ACT, Principal Financial Group, Inc.PFG and Radian Group Inc. RDN, which have gained 18.2%, 31.5% and 1.5%, respectively, in the past year. The S&P 500 Index has also gained 31.5% during this time.
1-Year Price Performance: MTG, ACT, RDN, PFG, Industry & S&P 500
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The insurer has a market capitalization of $36.40 billion. The average volume of shares traded in the last three months was 1.9 million.
MTG Shares Are Affordable
MGIC Investment shares are trading at a price-to-book value of 1.07X, lower than the industry average of 2.56X, the Finance sector’s 4.37X, and the Zacks S&P 500 Composite’s 8.18X. Its pricing, at a discount to the industry average, gives a better entry point to investors. The stock has a Value Score of B. This style score helps find the most attractive value stocks
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MTG’s Favorable Return on Capital
The return on invested capital (ROIC) has been increasing over the last few quarters, as the company has raised its capital investment during the same period. This reflects MTG’s efficiency in utilizing funds to generate income. ROIC was 10.4% in the trailing 12 months, better than the industry average of 2.2%.
MTG’s Growth Projection Encourages
The consensus estimate for 2026 revenues is pegged at $1.22 billion, implying a year-over-year improvement of 0.4%. The Zacks Consensus Estimate for MGIC Investment's 2026 earnings per share(EPS) indicates a year-over-year decrease of 2.5%.
The consensus estimate for 2027 EPS and revenues indicates an increase of 7.4% and 3.1%, respectively, from the corresponding 2025 estimates.
Earnings have increased 13.1% in the past five years, better than the industry average of 10.7%. The expected long-term earnings growth is pegged at 4.8%.
Factors Driving MTG
The private mortgage insurance (PMI) industry is performing well, supported by a resilient housing market despite elevated interest rates. MGIC investment wrote $14 billion of new insurance in the first quarter of 2026, an increase of 41% from last year. The increase was driven by higher refinance activity as well as a modestly larger purchase market. The company continues to grow its insurance in force, which stood at $302.7 billion at the end of the first quarter, up 3% from a year ago quarter.
New business and solid annual persistency should drive the insurance-in-force portfolio. A higher level of new and existing home sales, an increased percentage of homes purchased for cash, and an improved level of refinance activity should help MGIC Investment grow.
MTG has been witnessing a declining pattern of claim filings. Lower losses and claims should strengthen the balance sheet and improve this mortgage insurer’s financial profile.
The company has been benefiting from improving housing market fundamentals, such as household formations and home sales and the current capital status. As a result, the company is well- positioned to offer credit enhancement and low-down payment solutions to lenders, borrowers and GSEs. MTG remains optimistic about the opportunities in the housing market, which will enable the company to serve more people efficiently in the future.
The largest mortgage insurer in the United States is improving its capital position through capital contributions, reinsurance transactions and cash position. As of March 31, 2026, the company had $235 million of cash and cash equivalents, up 13.6% year over year Both leverage and times interest earned ratios have been improving.
A solid capital position supports MTG’s wealth distribution. As of March 31, 2026, MTG had authorization remaining to repurchase $232.6 million of common stock under the existing share repurchase program through Dec. 31, 2027. Its share repurchase activity reflects continued strong mortgage credit performance.
Risks for MTG
MTG’s core business, private mortgage insurance, is highly dependent on the overall health of the housing market. Following the post-pandemic housing surge, the pace of growth in MTG’s insurance in force has slowed. As mortgage originations and refinancing activity continue to decline, the company’s IIF expansion, and in turn its premium earned, could come under pressure.
High levels of unemployment may result in a higher number of loan delinquencies and insurance claims, and prevent borrowers from paying their mortgages, which can also adversely affect home prices
Wrapping Up
Higher premiums, outstanding credit quality, effective capital deployment and new business will continue to induce growth for MGIC Investment. However, weakening housing market conditions and rising unemployment could negatively impact home prices and profitability.
Its strong mortgage insurance growth, solid capital position, attractive valuations and favorable ROIC are noteworthy. It is, therefore, wise to retain this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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MGIC Investment Corporation (MTG): Free Stock Analysis Report
Principal Financial Group, Inc. (PFG): Free Stock Analysis Report
Radian Group Inc. (RDN): Free Stock Analysis Report
Enact Holdings, Inc. (ACT): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).