Value
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.3 |
| P/S | 7.1 |
| EV/EBITDA | 7.9 |
| Fwd P/E | 9.5 |
| PEG | 1.7 |
| Analyst target | 4.0 |
- ▸Forward P/E: 8.2x
- ▸PEG: 6.30
MTG · Why this verdict
Why MGIC Investment (MTG) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
MGIC Investment is a high-quality specialty insurance business with 60% net margins and a 3-out-of-4 earnings beat record, but the stock trades above analyst price targets with essentially no upside and declining revenues make the growth outlook challenging.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At $25.84, the stock is above analyst price targets with only 0.6% upside to resistance at $25.99, while downside risk of 4.0% to the stop at $24.80 creates an unfavorable risk-reward, compounded by the stock trading below its 200-day moving average. Targets | A pullback to near $24-$25 creates a new entry point as the stock recovers its 200-day moving average and analyst targets are revised upward above $28. | →Stable |
| CounterWith momentum recovering (MACD bullish and volume accumulation rising), the stock could break above resistance to new analyst targets without the anticipated pullback, making the wait costly. | ||
MGIC Investment generates 60% net margins and scores 7.4/10 on quality, ranking best-in-class among peers for margins, with a Piotroski F-Score of 7/9 indicating solid overall financial health. Quality breakdown | Net margins remain above 55% in each of the next 4 reported quarters. | →Stable |
| CounterFree cash flow is flagged at 66% of net income, an earnings quality warning, meaning the high reported margins may not fully translate into distributable cash, limiting the capital return capacity of the business. | ||
MGIC has beaten earnings estimates in 3 of the last 4 quarters, with the most recent beat of $0.76 against an estimate of $0.74 in April 2026, and average positive surprise of 7.0%, demonstrating consistent earnings delivery. Earnings | The company beats earnings estimates in at least 2 of the next 4 quarterly reports with positive surprises averaging above 3%. | →Stable |
| CounterThe February 2026 quarter was inline (just $0.75 against an $0.75 estimate), and the prior two beats were both meaningful at 12.16% and 12.87%, suggesting performance may be normalizing toward the low end of the beat range. | ||
Revenue is declining at -3% year-over-year, and growth scores only 2.0/10, indicating the business is in a period of contraction that limits the potential for stock re-rating even as margins remain high. Growth breakdown | Revenue growth returns to at least 0% on a year-over-year basis within 12 months as mortgage insurance volumes stabilize. | →Stable |
| CounterRevenue decline in mortgage insurance often reflects a cyclically lower origination environment, and when origination volumes recover as interest rates decline, MGIC's high-margin operating model could generate rapid earnings acceleration. | ||
At $25.84, the stock is above analyst price targets with only 0.6% upside to resistance at $25.99, while downside risk of 4.0% to the stop at $24.80 creates an unfavorable risk-reward, compounded by the stock trading below its 200-day moving average.
→StableTargets
- Expectation
- A pullback to near $24-$25 creates a new entry point as the stock recovers its 200-day moving average and analyst targets are revised upward above $28.
CounterWith momentum recovering (MACD bullish and volume accumulation rising), the stock could break above resistance to new analyst targets without the anticipated pullback, making the wait costly.
MGIC Investment generates 60% net margins and scores 7.4/10 on quality, ranking best-in-class among peers for margins, with a Piotroski F-Score of 7/9 indicating solid overall financial health.
→StableQuality breakdown
- Expectation
- Net margins remain above 55% in each of the next 4 reported quarters.
CounterFree cash flow is flagged at 66% of net income, an earnings quality warning, meaning the high reported margins may not fully translate into distributable cash, limiting the capital return capacity of the business.
MGIC has beaten earnings estimates in 3 of the last 4 quarters, with the most recent beat of $0.76 against an estimate of $0.74 in April 2026, and average positive surprise of 7.0%, demonstrating consistent earnings delivery.
→StableEarnings
- Expectation
- The company beats earnings estimates in at least 2 of the next 4 quarterly reports with positive surprises averaging above 3%.
CounterThe February 2026 quarter was inline (just $0.75 against an $0.75 estimate), and the prior two beats were both meaningful at 12.16% and 12.87%, suggesting performance may be normalizing toward the low end of the beat range.
Revenue is declining at -3% year-over-year, and growth scores only 2.0/10, indicating the business is in a period of contraction that limits the potential for stock re-rating even as margins remain high.
→StableGrowth breakdown
- Expectation
- Revenue growth returns to at least 0% on a year-over-year basis within 12 months as mortgage insurance volumes stabilize.
CounterRevenue decline in mortgage insurance often reflects a cyclically lower origination environment, and when origination volumes recover as interest rates decline, MGIC's high-margin operating model could generate rapid earnings acceleration.
Per-dimension breakdown
Quality
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.7 |
| ROA | 6.0 |
| Gross margin | 10.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 8.2 |
| FCF quality | 5.1 |
| Moat | 6.6 |
| Rule of 40 | 5.5 |
| Piotroski F | 7.8 |
- ▸Strong margins: 60%
- ▸Earnings quality warning: 66% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
2.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.8 |
| EPS growth | 2.3 |
- ▸Declining revenue: -3%
Momentum
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.1 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 7.5 |
| Volume | 0.0 |
- ▸Overbought (RSI 79)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat/negative + RSI 79 (late-cycle distribution risk)
Sentiment
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.7 |
| erm sentiment | 5.5 |
Insider
3.8/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.0 |
- ▸Modest insider selling — $5,271,201 (0.092% of mkt cap)
Peer rank
4.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.5 |
| quality rank | 7.5 |
| growth rank | 1.0 |
- ▸Best-in-class margins
Technical
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 1.7 |
| 52w position | 8.5 |
Risk (lower is worse)
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.3 |
| days to cover | 7.0 |
| volatility | 7.8 |
| put call | 10.0 |
| implied vol | 4.6 |
| max pain risk | 3.0 |
| beta | 8.9 |
| debt equity | 9.5 |
- ▸Above max pain $15
Catalyst
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 6.2 |
| dividend safety | 6.0 |
- ▸Strong earnings: 3B/0M
- ▸Dividend: 222.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.3>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:34d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.9=NEGATIVE
Warning (1)
- DEATH_CROSS:momentum=6.3>=5.0 recovering
Reward-to-Risk
-0.91
Upside
-8.8%
Downside
9.8%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 79
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.2 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Quality at 7.4) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.9=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.91 — supplementary context, not the trigger for this path.
The strongest dimensions are Quality at 7.4, Risk (lower is worse) at 7.3, and Catalyst at 6.4; the weakest are Growth at 2.0, Technical at 3.4, and Insider at 3.8. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.91 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1MGIC Investment generates 60% net margins and scores 7.4/10 on quality, ranking best-in-class among peers for margins, with a Piotroski F-Score of 7/9 indicating solid overall financial health.
Trip ifReported net margin falls below 50% in any quarterly filing.
- P2MGIC has beaten earnings estimates in 3 of the last 4 quarters, with the most recent beat of $0.76 against an estimate of $0.74 in April 2026, and average positive surprise of 7.0%, demonstrating consistent earnings delivery.
Trip ifActual EPS misses consensus estimate by more than 5% for 2 consecutive quarters.
- P3Revenue is declining at -3% year-over-year, and growth scores only 2.0/10, indicating the business is in a period of contraction that limits the potential for stock re-rating even as margins remain high.
Trip ifRevenue declines by more than 10% year-over-year for 2 consecutive reported quarters.
- P4At $25.84, the stock is above analyst price targets with only 0.6% upside to resistance at $25.99, while downside risk of 4.0% to the stop at $24.80 creates an unfavorable risk-reward, compounded by the stock trading below its 200-day moving average.
Trip ifStock price drops below $24.80, the stop-loss level, on a closing basis.