MGIC(MTG) IS UNDERVALUED RELATIVE TO OTHER PMI COMPANIES
Most PRIVATE MORTGAGE INSURANCE(PMI) COMPANIES have attractive valuation metrics, when compared to the average valuation of The S&P 500 INDEX of companies.
MGIC INVESTMENT(MTG) is particularly attractive and is undervalued, presenting a good opportunity for investors.
These are recent price/earnings ratios and price/book value ratios. Price to book ratio is calculated by dividing the market price of a stock by it's accounting book value on it's Financial Statements issued annually or quarterly:
NAME ...PE ...FWD PE PRICE/BOOK*
MGIC.... 7.35. 7.66 .. 1.12
RADIAN. 8.29. .7.55. . 1.28
ESNT..... 9.54 . 8.28. . 1.80
NMIH . 14.29. .9.24. . 2.34
*S&P 500 PRICE TO BOOK VALUE 2.80
MGIC'S P/E ratio is the lowest of the four companies presented here. NMI HOLDINGS has the highest because, analysts expect NMI HOLDINGS to grow it's net income higher in a few years and lower it's P/E ratio, at least that's the ASSUMPTION!
In addition, NMI HOLDINGS also has the highest PRICE/BOOK RATIO. Once again analyst expect, that NMI HOLDINGS'S book price $11.88 Will grow to $27.33 on it's
FINANCIAL Statements in a few years, at least that's the assumption!
The implications of a high price/book value is that is no cash or capital on the balance sheet to back up the inflated price. So, if some financial need arises in the way of liabilities, OH WELL!
Consider putting some money into MGIC, who has been in business for 62 years. They have $1.1 billion in excess cash assets over PMIERS REQUIREMENTS, which theoretically adds $3.11 to it's book vale for a total of $15.82 in book value.
MGIC started the PMI business in 1957 and has the highest net operating income at $660 million annually as of 2018 in the industry.
