Company Overview
MGIC Investment Corporation operates within the Financial Services sector, specifically focusing on the Insurance - Specialty industry, where it provides private mortgage insurance, other mortgage credit risk management solutions, and ancillary services across the United States, the District of Columbia, Puerto Rico, and Guam. The company's primary business involves offering insurance that provides mortgage default protection, positioning it as a specialized provider in the broader financial landscape. As of the latest data, MGIC Investment Corporation holds a market capitalization of $5.57B and reported annual revenue of $1.21B over the trailing twelve months. The organization employs 542 individuals to support its operations, reflecting a significant operational scale relative to its peer group in the specialty insurance market. These valuation and revenue figures indicate that MGIC maintains a substantial market presence, allowing it to leverage its specialized risk management capabilities while managing a workforce that facilitates its diverse service offerings in the mortgage finance ecosystem.
Financial Health
The company reported revenue of $1.21B and net income of $738.35M for the trailing twelve months, with EBITDA reaching $971.09M. The substantial gap between revenue and net income, where net income is approximately 60.8% of revenue, reveals an exceptionally efficient cost structure with minimal overhead relative to gross premiums written. Free cash flow stands at $566.42M, which indicates robust financial flexibility allowing the firm to fund operations, service debt, or return capital without relying on external financing. The company maintains a gross margin of 95.1%, an operating margin of 74.2%, and a profit margin of 60.8%, figures that collectively demonstrate the high-margin nature of its insurance underwriting and ancillary services. On the balance sheet, MGIC holds $368.99M in cash against $646.14M in debt, resulting in a debt-to-equity ratio of 12.55, which suggests a leveraged capital structure typical of insurance carriers that rely on investment income and leverage to enhance returns. Despite the leverage, the current ratio of 6.01 signals strong short-term liquidity, ensuring the company can easily meet its immediate obligations. Furthermore, the return on equity is 14.3% and the return on assets is 9.1%, metrics that reveal management effectiveness in generating profits from shareholder equity and utilizing its asset base efficiently.
Valuation Assessment
MGIC Investment Corporation trades with a trailing P/E ratio of 8.19 and a forward P/E of 7.75, where the lower forward multiple implies that the market expects earnings to grow relative to current levels. The price-to-book ratio is 1.10, indicating that the market values the company at a slight premium over its tangible book value, reflecting confidence in its intangible assets and future underwriting performance. Alternative valuation metrics show a price-to-sales ratio of 4.59 and an EV/EBITDA of 5.98, suggesting the market prices the stock based on earnings power rather than sales volume, which is consistent with the high-margin insurance business model. The stock has a 52-week high of $29.97 and a 52-week low of $21.94, providing a context for price volatility; without the current specific share price, the range defines the trading band within which the stock has fluctuated. The beta value is 0.80, which means the stock exhibits lower price volatility relative to the broader market, moving less aggressively than the S&P 500 during periods of market turbulence. These valuation metrics collectively present a picture of a company trading at a discount to historical averages, supported by a low beta that appeals to income-oriented investors seeking stability.
Growth & Income
Revenue growth year-over-year is -0.9%, while earnings growth year-over-year is 3.9%, indicating that earnings are growing faster than revenue, a phenomenon often driven by expense discipline or favorable underwriting results in the specialty insurance sector. The company offers a dividend yield of 2.3% with a payout ratio of 17.8%, a low payout ratio that suggests the dividend is highly sustainable given the strong earnings growth and high profit margins. With a payout ratio this low, the company retains the majority of its earnings, providing management with significant capacity to reinvest into business growth, acquire new business lines, or bolster capital reserves rather than distributing all profits. The overall growth and income profile combines a modest revenue contraction with expanding profitability and a reliable, low-risk dividend stream, creating a hybrid investment characteristic that balances capital appreciation potential with steady income generation.