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Is It Time To Add Radian Group (RDN) to Your Portfolio?

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Year to date, the shares of Radian Group Inc. (RDN - Free Report) gained 0.83%, outperforming the Zacks categorized Multiline Insurance industry’s decrease 0.29%. The insurer has been witnessing upward estimate revisions over the last 60 days. Also, return on equity of 12% compares favorably with the industry average of 6.3%.


Radian Group’s mortgage insurance portfolio is expected to create a strong foundation for the future earnings. The company has been writing a high volume of quality and profitable business since 2008. Given the projected increase in persistency, the company expects insurance in force to rise in 2017.

Radian Group has been witnessing a decline in claim payments over the last few years. The company expects claims paid for full-year 2017 between $300 million and $325 million. Given the strong credit characteristics of the new loans insured, we expect the company to see fewer claims than before. Also, Radian Group remains focused on controlling costs, facilitating margin expansion.

Radian Group’s growth initiatives continue to impress. Its efforts to further diversify the revenue stream and expand its business beyond traditional mortgage insurance are encouraging.

Also, the Zacks Rank #2 (Buy) multi line insurer’s efforts to strengthen its financial position and improve debt maturity profile raise optimism.

Radian Group carries a VGM score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Also, price earnings growth ratio of 1.34 compares favorably with the industry average 1.40.

Shares of Radian Group are presently undervalued with respect to price-to-earnings ratio but a little overvalued on a price-to-book basis.

Radian is poised for long-term growth. Declining delinquency, lower levels of paid claims and an improving risk-based capital ratio reflect an improvement in the company’s operating environment. The expected long-term earnings growth is currently pegged at 7.5%.

Other Stocks to Consider

Other stocks from the finance sector that warrant a look include American Financial Group, Inc. (AFG - Free Report) , Progressive Corp (PGR - Free Report) and Infinity Property and Casualty Corporation . Each stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

American Financial Group engages primarily in property and casualty (P&C) insurance with focus on specialized commercial products for businesses. Shares of the company gained 7.54% year to date.

Infinity Property and Casualty, through its subsidiaries, provides personal automobile insurance products in the United States. Shares of the company gained 6.14% year to date.

Progressive offers personal and commercial P&C insurance, and other specialty P&C insurance and related services, primarily in the U.S. Shares of the company gained 11.55% year to date.

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