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Private Mortgage Insurer MGIC Investment Corp (MTG, $MTG) Leads ValuEngine Short-Term Forecast Screen

|Includes:MGIC Investment Corporation (MTG)
Go to ValuEngine.com
February 17, 2010
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VALUATION WARNING:  Our models find that overvaluation is approaching levels typically seen when a market correction is imminent. Overvalued stocks now make up almost 68% of our universe and almost 35% of the universe is calculated to be overvalued by 20% or more.  ALL sectors are now calculated to be overvalued.

Paging Houdini

Private Mortgage Insurer MGIC Investment Corp (MTG, $MTG) Leads Short-Term Forecast Screen

  MGIC Investment Corporation (MTG, $MTG) is a holding company which, through its wholly owned subsidiary, Mortgage Guaranty Insurance Corporation, is the leading provider of private mortgage insurance coverage in the United States to the home mortgage lending industry. Private mortgage insurance covers residential first mortgage loans and expands home ownership opportunities by enabling people to purchase homes with less than 20% down payments. If the home owner defaults, private mortgage insurance reduces and, in some instances, eliminates the loss to the insured institution.

  The company has been battered by the housing crisis and as expected share prices took a real nose-dive during the deflation of the housing bubble.  The company recently announced that it expected to continue to post losses for the foreseeable future and a return to profitability is not expected until 2012.  Shares nose-dived near the end of January on the bad news.  However, shares jumped hard the last two weeks despite the pessimistic outlook.  Our model seems to be influenced by this volatility and in a screen for short-term forecast prospects today MTG topped a list of 47 tickers for short and long-term forecast returns.

  ValuEngine has issued a STRONG BUY recommendation for MGIC Investment Corporation on Feb. 17, 2011. Based on the information we have gathered and our resulting research, we feel that MGIC Investment Corporation has the probability to OUTPERFORM average market performance for the next year. The company exhibits ATTRACTIVE market valuation, expected EPS growth and company size.

  Based on available data as of Feb. 17, 2011, we believe that MTG should be trading at $23.02. This makes MTG 57.47% undervalued. Fair Value indicates what we believe the stock should be trading at today if the stock market were perfectly efficient and everything traded at its true worth. For MTG, we base this on actual earnings per share (NYSEARCA:EPS) for the previous four quarters of -$2.37, forecasted EPS for the next four quarters of $0.20, and correlations to the 30- year Treasury bond yield of 4.67%.

Subscribers can check out the latest figures on MGIC Investment Corporation from our models HERE. 

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Market Indices Data
  Latest Change YTD
Dow Jones
12,041.20 1.06 4.01%
NASDAQ Composite
2,754.24 3.05 3.82%
Russell 2000
798.62 -0.27 1.91%
S&P 500
1,304.83 -2.76 3.75%

 

ValuEngine Market Overview
Summary of VE Stock Universe
Stocks Undervalued
32.4%
Stocks Overvalued
67.6%
Stocks Undervalued by 20%
14.26%
Stocks Overvalued by 20%
34.65%

 

ValuEngine Sector Overview
Sector Change MTD YTD Valuation Last 12-MReturn P/E Ratio
Oils-Energy 0.97% 2.49% 8.53% 30.00% overvalued 47.22% 43.48
Basic Materials 0.39% 2.00% 0.39% 21.21% overvalued 66.00% 35.68
Transportation 1.19% 1.81% 1.12% 17.98% overvalued 36.27% 27.32
Computer and Technology 0.68% 7.26% 12.13% 17.67% overvalued 45.64% 41.21
Multi-Sector Conglomerates 0.58% 0.96% 5.19% 17.62% overvalued 39.79% 29.99
Business Services 0.64% 2.50% 3.63% 16.19% overvalued 23.33% 38.77
Aerospace -0.02% 0.62% 5.06% 15.86% overvalued 36.18% 19.20
Industrial Products 0.53% 3.03% 6.16% 14.27% overvalued 35.95% 29.02
Auto-Tires-Trucks -0.12% 1.05% 1.29% 14.15% overvalued 53.18% 23.16
Retail-Wholesale 1.11% 5.33% 3.66% 12.79% overvalued 34.40% 28.81
Finance 0.59% 3.24% 5.16% 11.58% overvalued 22.14% 25.15
Consumer Discretionary 0.63% 3.89% 4.43% 10.51% overvalued 30.14% 30.56
Consumer Staples 0.85% 1.14% 0.51% 10.50% overvalued 21.18% 27.56
Construction 0.76% 1.16% 5.12% 10.49% overvalued 17.79% 46.62
Utilities 0.35% 0.30% 1.59% 9.02% overvalued 19.39% 26.42
Medical 0.71% 3.10% 8.67% 1.60% overvalued 20.33% 45.00

 

 

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Stocks: MTG