MGIC Investment Crushes Estimates

Seth Jayson, The Motley Fool
Updated

MGIC Investment (NYS: MTG) reported earnings on Jan. 24. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), MGIC Investment crushed expectations on revenues and missed expectations on earnings per share.

Compared to the prior-year quarter, revenue expanded significantly and earnings per share contracted.

Margins increased across the board.

Revenue details
MGIC Investment recorded revenue of $447 million. The four analysts polled by S&P Capital IQ predicted a top line of $325 million. Sales were 21% higher than the prior-year quarter's $348 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at -$1.19. The five earnings estimates compiled by S&P Capital IQ predicted -$0.90 per share on the same basis. GAAP EPS were -$0.67 for Q4 compared to -$0.93 per share for the prior-year quarter.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was -16.1%, 1,620 basis points better than the prior-year quarter. Operating margin was -16.1%, 1,620 basis points better than the prior-year quarter. Net margin was -29.5%, 1,970 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $320 million. On the bottom line, the average EPS estimate is -$0.17.

Next year's average estimate for revenue is $1.3 billion. The average EPS estimate is -$1.08.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 307 members out of 498 rating the stock outperform, and 191 members rating it underperform. Among 174 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 92 give MGIC Investment a green thumbs-up, and 82 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on MGIC Investment is outperform, with an average price target of $5.33.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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