MGIC Investment Corp

MGIC Investment reported second-quarter revenues of $295.4 million, down 2.9% year over year, in line with analyst expectations. The company beat analysts' EPS estimates, and CEO Tim Mattke highlighted a 14.5% return on equity. The stock is up 1.9% since reporting and currently trades at $31.15. Among peers, Essent Group posted revenues of $362.7 million, up 13.6% year over year and beating expectations by 9.7%, while Radian Group reported revenues of $580.7 million, up 90.8% year over year but missed EPS estimates. First American Financial reported revenues of $2.12 billion, up 15% year over year, and Trupanion reported revenues of $392.9 million, up 11.1% year over year.

MGIC Investment Corporation reported second-quarter net income of $182.1 million, or $0.86 per diluted share, driven by favorable loss reserve development and disciplined expense management. New insurance written reached $17.8 billion, an 8.5% increase from the prior year and the highest quarterly level since the third quarter of 2022, while insurance in force grew 2.6% to $304.8 billion. The board approved a $0.17 per share dividend for the third quarter, up from $0.15, and authorized a new $750 million share repurchase program extending through December 31, 2028. The company also completed a traditional excess-of-loss reinsurance transaction providing up to $168 million of protection on eligible 2027 new insurance written, and its reinsurance programs reduced PMIERs required assets by $3.1 billion, or approximately 52%.

MGIC Investment stock may be undervalued despite strong mortgage insurance growth. The company has returned 132.6% over the last five years, yet its current price-to-earnings ratio of 8.3 times sits below the peer average of 8.6 times and at a heavy discount to the broader diversified financial industry at 16.0 times. A tailored fair P/E ratio for MGIC Investment is 10.5 times, suggesting the market is pricing the stock at a sizable discount to what fundamentals might justify. On Simply Wall St's broader checks, MGIC Investment screens as undervalued in five of six areas. The key question is whether the discount reflects lingering caution about mortgage cycle and credit risk, or if it is simply a lag in how investors are pricing its recurring premium earnings.

MGIC Investment Corporation's core mortgage insurance business generates recurring premium income from its large insurance-in-force portfolio, with policies typically remaining in force until borrowers refinance, sell their homes, or accumulate sufficient equity. The company benefits from growth in purchase mortgage originations, expanding insurance-in-force, and sustained demand for private mortgage insurance as an alternative to government-backed programs. Strong underwriting discipline, high-quality new insurance written, favorable home price appreciation, and healthy employment conditions contribute to low claim frequencies and strong underwriting profitability. MGIC also earns investment income by investing premium collections before claims are paid, and combined with prudent capital management, reinsurance programs, and disciplined risk management, maintains a resilient balance sheet while optimizing capital efficiency. Overall, the mortgage insurance segment provides a scalable, capital-light business model that generates consistent earnings and strong cash flow across housing cycles.

NMI Holdings operates as a pure-play private mortgage insurer through its primary subsidiary, National Mortgage Insurance Corporation, generating virtually all of its revenue from mortgage insurance. The business benefits from growth in purchase mortgage originations, higher insurance-in-force, and increased adoption of private mortgage insurance relative to government-backed programs. Recurring premium revenues provide predictable cash flows, while disciplined underwriting and risk-based pricing have historically maintained low claim rates and favorable loss ratios. Favorable housing market trends, including strong home purchase activity and rising first-time homebuyer demand, further support expanding insurance-in-force and improved profitability. The stock has gained 1% year-to-date, outperforming its industry, and carries a Value Score of A with a forward price-to-book of 1.19X, below the industry average of 1.44X.