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Radian Group (RDN) Up 51% in a Year: More Room for Upside?

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Shares of Radian Group (RDN - Free Report) have gained 50.7% in a year compared with the industry's and the Finance sector’s rally of 39.9% and 46%, respectively. The Zacks S&P 500 composite has increased 39.8% in the said time frame. With a market capitalization of $4.3 billion, average volume of shares traded in the last three months was 1.4 million.

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Solid mortgage insurance portfolio and improving risk-based capital ratio are likely to continue aiding Radian Group. The company has a decent earnings surprise record. It beat earnings estimates in the last three reported quarters.

The Zacks Consensus Estimate for 2021 and 2022 earnings has moved up 0.7% and 1.3%, respectively, in the past 60 days, reflecting analysts’ optimism.

Will the Bull Run Continue?

The Zacks Consensus Estimate for 2021 and 2022 indicates year-over-year improvement of 56.9% and 12.1% respectively. The expected long-term earnings growth rate is pegged at 5%.

Radian’s compelling mortgage insurance portfolio creates a solid base earnings. The company thus always remains focused on continually improving its insurance portfolio. Radian presently estimates the private mortgage insurance market to be between $550 billion and $600 billion, the second-highest MI volume year in history. The company thus remain posed to benefit from the opportunity.

Also, solid persistency and rise in new mortgage insurance business should fuel increase in insurance in force.

Its strategic investments on title and digital real estate businesses bodes well. Its integration with an Accenture owned company, Mortgage Cadence is in tandem with Radian’s continued focus on digital solutions to bolster the mortgage and real estate transaction of its customers and borrowers.

This Zacks Rank #3 (Hold) mortgage insurer has been witnessing declining claim payments over the last few years. Given the strong credit characteristics of the new loans insured, we expect the company to see fewer claims than before.

Radian Group has been strengthening its balance sheet with increasing liquidity and lowering leverage.

Riding on a solid capital position, the company has been hiking dividends, which witnessed a whopping three-year CAGR (2019-2021) of 282.6%. In fact, it has $190.2 million remaining under its share buyback authorization. Its dividend yield of 2.5% appears attractive compared with the industry average of 2.2%, making it an attractive pick for yield-seeking investors.

The company has a favorable VGM Score of B. This helps to identify stocks with the most attractive value, growth and momentum.

Stocks to Consider

Some better-ranked stocks include Assurant (AIZ - Free Report) , MetLife (MET - Free Report) and Prudential Financial (PRU - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Assurant delivered an earnings surprise of 26.02% in the last reported quarter.

MetLife delivered an earnings surprise of 48.65% in the last reported quarter.

Prudential delivered an earnings surprise of 53.36% in the last reported quarter.

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MetLife, Inc. (MET) - free report >>

Prudential Financial, Inc. (PRU) - free report >>

Assurant, Inc. (AIZ) - free report >>

Radian Group Inc. (RDN) - free report >>