MTG
MGIC Investment Corporation
$29.65
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 46.0% below fair value
You pay
$29.65
Bear
$35.87
Fair
$54.87
Bull
$66.28
Bear
$35.87
+21.0%
ROTCE 10.8% → 1.72x TBV
Fair
$54.87
+85.1%
ROTCE 14.4% → 2.63x TBV
Bull
$66.28
+123.5%
ROTCE 16.5% → 3.17x TBV
Key Value Driver
ROTCE (14.4%) vs. cost of equity (7.9%)
Implied Market Multiple
1.22x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $28.00 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $54.87 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $28.00 (from 22 analysts). Our estimate is 128% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly