Yahoo Finance MGIC Investment Corporation Full-Year Results: Here's What Analysts Are Forecasting For Next Year
It's been a good week for MGIC Investment Corporation (NYSE:MTG) shareholders, because the company has just released its latest annual results, and the shares gained 4.2% to US$14.37. MGIC Investment reported US$1.2b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.85 beat expectations, being 3.3% higher than what analysts expected. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
See our latest analysis for MGIC Investment
Following last week's earnings report, MGIC Investment's eight analysts are forecasting 2020 revenues to be US$1.23b, approximately in line with the last 12 months. Statutory earnings per share are forecast to reduce 5.0% to US$1.81 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.24b and earnings per share (EPS) of US$1.80 in 2020. So it's pretty clear that, although analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
Analysts reconfirmed their price target of US$17.46, showing that the business is executing well and in line with expectations. The consensus price target just an average of individual analyst targets, so - considering that the price target changed, it would be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values MGIC Investment at US$20.00 per share, while the most bearish prices it at US$13.50. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the MGIC Investment's past performance and to peers in the same market. It's pretty clear that analysts expect MGIC Investment's revenue growth will slow down substantially, with revenues next year expected to grow 1.3%, compared to a historical growth rate of 3.3% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 3.2% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than MGIC Investment.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. The consensus price target held steady at US$17.46, with the latest estimates not enough to have an impact on analysts' estimated valuations.
With that in mind, we wouldn't be too quick to come to a conclusion on MGIC Investment. Long-term earnings power is much more important than next year's profits. We have forecasts for MGIC Investment going out to 2022, and you can see them free on our platform here.
It might also be worth considering whether MGIC Investment's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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