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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Mgic Investment Corporation (XNYS:MTG) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
MTG
Name:
MGIC INVESTMENT CORPORATION (XNYS:MTG)
Sector:
227.12M
Industry:
Insurance�Specialty
CEO:
Mr. Timothy Mattke
Total Employees:
711
Our Technological Advancement Rating
Our Rating:
-
-
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF MGIC INVESTMENT CORPORATION(MTG) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND INSURANCE�SPECIALTY INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
13.99
One Month Price Target:
$14.1
Six Month Price Target :
$14.66
Likely Price in One Year's Time:
Ticker:
$15.34
Likely Trading Range Today Under (Normal Volatility)
$13.91
Price Upper limit ($) :
$14.08
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$12.96
This week:
$11.69
This month :
$9.39
Other Primary facts
Market Cap:
4.17B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
303.44M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
25.91%
-24.94%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$18.76
$16.57
$9.22
$11.41
Medium risk (<10%) entry points
Buy Call
Sell Call
$15.86
Buy Put:
Sell Put:
$15.39
$12.11
$12.59
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
MTG
Sharpe Ratio:
1.49%
Comparison:
MTG, is amongst the top 60% stocks with highest risk-adjusted returns
Sharpe ratio is 600.94% higher than the industry
& is -34.52% lower than the market/S&P 500 average
Average Returns/Yield of
MTG
Daily returns:
0.06%
Weekly returns:
0.31%
Monthly returns:
1.26%
Yearly returns:
3.76%
Comparison of returns:
Average annual returns/yield (last 3 years) is 300.23% above industry average
Classification:
MTG, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.96
Statistical test of Returns:
MTG has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
3.61%
Weekly Volatility:
8.08%
Monthly Volatility:
16.15%
Yearly Volatility:
55.95%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.19%
Volatility in last five trading days has been -67.19% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-7.35%
Weekly VaR:
-16.45%
Monthly VaR:
-32.89%
How Much Can the price of
MTG
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-28%
Worst case (decline):
>85%
This translates to price declining to:
$10.02
This translates to price declining to:
$2.10
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
MTG is a 132.14% riskier investment compared to the market/S&P 500 & is 98.88% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 31.86% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
MTG
Beta in relation to market/S&P 500--1.43
Expected beta in 1 year's time:
0.851
Expected beta in 3 year's time:
1.204
Unlevered (debt free) Beta:
1.235
Beta in relation to Nasdaq (XNAS):
0.966
Beta in relation to all global stocks::
0.994
Beta Comparison & Analysis
Beta of competitors/peers::
1.063
Beta is 34.90% higher than peers
Average Industry Beta:
1.047
Beta is 36.93% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
11.02%
Sustainable growth rate is -32.95% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.021
Alpha is -131.85% below industry average alpha yield
Alpha is 133% higher than market/& is unsustainably high
Analysis of Cost of Capital of
MTG
Equity cost of capital:
0.130
Equity cost of capital is 25.66% above industry mean WACC
Unlevered (without debt) cost of capital:
11.17%
Before-tax cost of debt:
7.30%
After-tax cost of debt:
5.77%
Overall debt rating:
Non-investment grade (junk/speculative grade
Weighted average cost of capital (WACC):
5.77%
WACC is 12.29% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$3.90
Revenue growth rate per share of (3Y):
0.92
Annual revenue growth rate is -53.76% below industry average
EPS:
$1.96
Expected Annual growth rate of EPS (3Y):
-1.05%
Expected future EPS growth rate is -113.89% lower than the Insurance�Specialty industry
Free cash flow (FCF) per share:
$2.25
-
-
Debt per share
$3.08
EBITDA per share
$3.18
Valuation Analysis Today of
MTG
P/E Ratio:
6.03
P/E Ratio of Competitors/Peers:
12.92
P/E ratio is -53.35% lower than main peers & is -14.24% lower than the industry
Stock price/value with industry average P/E ratio: $13.77
MTG is 1.57% overvalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $17.24
Present value of the expected future dividends only: $3.43
P/S (Price to Sales ratio):
3.59
Price to sales ratio is 29.23% above the industry mean
P/B (Price to book value ratio):
0.92
Price to free cash flow: 6.23
Price to free cash flow ratio is -21.01% lower than the industry
Net income growth rate (3Y):
3.57%
Net income growth rate is -97.27% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 3.96%
Dividend yeild: 2.29%
Previous Dividend: $0.08
Previous adjusted dividend: $0.08
Previous Dividend: $0.32
Expected next dividend best case: $0.09
Expected next dividend worst case: $0.07
Average dividend payment (long-term): $0.07
Average dividend increase/decrease (growth rate) % per period: 3.33%
Expected next dividend payment date: 24/08/2022
Expected next dividend record date: 08/10/2022
Expected next dividend declaration date: 27/07/2022
Previous dividend payment date: 26/05/2022
Previous dividend record date: 05/12/2022
Previous dividend declaration date: 28/04/2022
Dividend History:
2022-05-11--$0.08
2021-11-09--$0.08
2021-05-12--$0.06
2022-02-15--$0.08
2021-08-11--$0.08
2021-02-16--$0.06
Dividend growth rate is -422.19% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
20.29%
Net debt to equity ratio:
9.94%
Debt to assets ratio:
13.66%
Net debt to assets ratio:
6.69%
Debt-to-asset ratio is -60.53% below industry average
Ability to repay debt:
Interest coverage ratio:
14.12
Interest coverage ratio is 298.01% more than industry average
Looking forward:
Debt growth rate:
-7.76%
Annual debt growth is 108% higher than industry average debt growth rate
Debt repayment rate in last quarter: 5.74%
Analysis of Key Statistics
Correlation of price movement with the market:
0.597
Statistical significance of correlation:
MTG has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.587
Stock price is 1.76% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.587
Correlation of price movement with Nasdaq (^IXIC):
0.034
Covariance of price movement with the market:
0.072
Kurtosis
14.385
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
0.107
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
MTG
Gross Profit Margin Ratio:
-
Operating Profit Margin Ratio:
67.81%
Operating profit margin is 114.44% higher than the industry
Net Profit Margin Ratio:
-
Effective Tax Rate:
20.64%
Effective tax rate is -5.34% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
14.32%
Return on equity (ROE) is -33.48% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
9.64%
Return on assets (ROA) is 52.46% higher than the industry
Financial Leverage:
1.2x
Current Ratio:
0
-
Cash Conversion Cycle (days):
0
-
The remaining useful life of property plant & equipment is: 18.4 years
Stock based compensation to net income ratio:
-
In-depth Efficiency Analysis
Revenue generated per employee:
1.7M
Each employee generates 63% more revenue than industry average revenue per employee
EBITDA generated per employee:
1.4M
Each employee generates 143% more EBITDA than industry average revenue per employee
Profit generated per employee:
928.2K
Each employee generates 141% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
319.4K
Each employee generates 198% more free cash flow than industry average revenue per employee
Assets/Capital per employee
0.0K
Each employee generates 198% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
MTG
CINTAS CORPORATION (XFRA:CIT)
ESSENT GROUP LTD (XNYS:ESNT)
EVERCORE INC. (XNYS:EVR)
RLI Corp. (XNYS:RLI)
ARES-PA
HAGERTY, INC. (XNYS:HGTY)
AXS-PE
STERLING BANCORP (XNYS:STL)
Grupo Aval Acciones y Valores SA (XNYS:AVAL)
Current Analyst Ratings
Strong buy�21%
Buy�21%
Hold�8%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Strong buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
1.18B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
-
-
-
-
-
-
-
-
-
68.29M
63.99M
963.87M
801.78M
659.98M
831.60M
171.62M
659.98M
Statement of Cash Flow
Date:
Period:
15.40M
Differed Income Tax :
5.95M
Stock Based Compensation :
-
Change in Working Capital :
8.05M
Accounts Receivables:
44.24M
Other Working Capital:
7.90M
Other Non-Cash Items:
23.61M
Net Cash Provided by Operating Activities:
228.01M
Investments in PP&E:
- 888.00K
Net Acquisitions:
-
Purchases of Investments:
- 94017.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
477.11M
5.94B
6.41B
122.26M
-
-
-
45.18M
-
-
5.95B
-
-
-
6.84B
6.84B
-
-
-
-
-
-
935.28M
-
935.28M
3.17B
2.23B
371.35M
3.40B
- 150848.0K
-
March 31, 2022 at 6:00:00 AM
350.74M
4.61B
6.84B
11.89B
935.28M
458.2M
444.35M
-
349.44M
- 56965.00K
-
- 123640.00K
- 26112.00K
- 185795.00K
- 392512.00K
-
184.94M
489.90M
304.96M
228.01M
- 888.00K
227.12M
Our Proprietary Portfolio Rating
Our Rating:
-
Price Forecast/Expected Price in Next 5 Years of
MTG
2023
2024
2025
2026
2027
$18.77
$20.58
$22.56
$24.74
$27.12