How the housing market plays out will determine whether the shares of MGIC Investment Corp. (NYSE: MTG) are a buy, sell or watch on the penny stock. The NYSE penny stock of MGIC, which is set to report Q1 earnings before the bell on Monday, closed down another -5.64% on Friday when 8.4 million shares of MTG traded. Shares of MGIC’s penny stock finished the week down -12.38%.
MGIC Investment received coverage by Wall Street analysts at Keefe, Bruyette & Woods, Inc on March 26th with a “market perform” rating on the penny stockm MTG. Zack’s reiterated their “neutral” rating on April 13th citing the gradual recovery of the housing market.
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MGIC, the largest private mortgage insurer in the U. S., had nearly $173 billion worth of direct primary insurance in play as of the end of 2011 compared to $191 billion and $212 billion as of the end of 2010 and 2009 respectively. Since the start of 2012, shares of MGIC’s penny stock have lost a mere -1.34%. although there had been a bullish run on MTG during Q1 which saw the stock reach as high as $5.15.
MGIC Stock Snap Shot:
Market Cap: 741.40M
Price/Sales (ttm): 0.52
Price/Book (mrq): 0.66
(May 2, 2011): 9.08
(Oct 4, 2011): 1.51
% Below 50-Day Mov Avg: -19.85%
% Below 200-Day Mov Avg: -1.48%
Avg Vol (3 month): 7,072,210
Avg Vol (10 day): 6,651,050
Shares Outstanding: 201.47M
% Held by Insiders: 12.84%
% Held by Institutions: 84.9%
(a/o Mar 30, 2012): 41.00M
MGIC has been crippled with losses that don’t appear to have an end insight for the short-term. Although MGIC’s loss reserves at the end of 2011 continued to be significantly impacted by expected rescission activity, the impact was less than that as of the end of 2010.
The bright side of MGIC’s weakening position is that 68% of their defaulted loans inventory are guaranteed by Freddie Mac and Fannie Mae. From a technical point of view, RSI indicates that MGIC stock is entering into an oversold point and could be scooped up at a cheap price for the long-investor.
Bottom Line: With 2012 EPS estimate calling for a loss of $1.37 per share and 2013 EPS estimate expecting a loss of 21 cents per share, it could be a while before MGIC is back in the black. If you like long and strong, add MTG to your list of penny stocks to watch and look for their Q1 release to come before the opening bell on Monday.
Analyst expectations for the NYSE penny stock of MGIC are for revenue to come in at around $310.46M and an average EPS expectation of -0.46. Should MGIC report revenue greater than $343.66M, expect to see the stock take off at the open. If revenue falls below the low estimate of $267.50M, see about scooping up the stock at anything under $3.20.