MGIC Investment: Strong Earnings Beat Potential Ahead

If you seek a stock that consistently surpasses earnings estimates and is poised to continue this trend in its upcoming quarterly report, consider MGIC Investment (MTG). Operating within the Zacks Insurance – Multi Line sector, this mortgage insurance company appears ready for another earnings surprise.

In reviewing its past two reports, MGIC has demonstrated a commendable pattern of exceeding earnings estimates. On average, the company has outshone projections by 12.85% over the last two quarters.

Recent Performance and Estimates

For the latest quarter, analysts expected MGIC to report earnings of $0.65 per share; however, it delivered $0.72 per share, resulting in a surprise of 10.77%. In the prior quarter, the consensus estimate was $0.67 per share, while MGIC reported $0.77 per share, yielding a surprise of 14.93%.

Given this earnings history, recent estimates for MGIC are on the rise. The Zacks earnings ESP (Expected Surprise Prediction) currently stands positive, signaling a favorable outlook for an earnings beat, particularly when combined with its strong Zacks Rank.

Investment Insights

Research indicates that stocks combining a positive earnings ESP with a Zacks Rank of #3 (Hold) or better achieve a positive surprise nearly 70% of the time. In practical terms, of ten stocks fitting this profile, up to seven may outperform consensus estimates.

The Zacks earnings ESP is a comparative tool that juxtaposes the Most Accurate Estimate with the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate reflects analysts’ latest revisions, often deemed more precise than earlier projections.

As it stands, MGIC has an earnings ESP of +7.04%, indicating that analysts are optimistic about its short-term earnings potential. Coupled with a Zacks Rank of #2 (Buy), this suggests the possibility of yet another earnings beat. The company is set to release its next earnings report on April 30, 2025.

Understanding the Earnings ESP

When utilizing the earnings ESP metric, it’s crucial to recognize that a negative value diminishes its predictive capability. Nevertheless, a negative earnings ESP does not inherently predict an earnings miss. Many companies exceed the consensus EPS estimate for reasons other than their earnings forecasts.

Consequently, reviewing a company’s earnings ESP prior to its quarterly release is vital to enhance the odds of investment success. Leverage our earnings ESP Filter to identify the best stocks for purchase or sale before their reports.

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This article originally appeared on Zacks Investment Research (zacks.com).

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.