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Here's Why You Should Hold Radian Group (RDN) in Your Portfolio
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Radian Group (RDN - Free Report) has been in investors’ good books on the back of its lower refinance activity, growth in valuation business and effective capital deployment.
Growth Projections
The Zacks Consensus Estimate for Radian Group’s 2021 and 2022 earnings per share is pegged at $2.83 and $3.23, indicating a year-over-year increase of 62.6% and 13.9%, respectively.
Earnings Surprise History
Radian Group has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, with the average being 1.64%.
Zacks Rank & Price Performance
Radian Group currently has a Zacks Rank #3 (Hold). In the past year, the stock has rallied 0.6% compared with the industry’s increase of 4.1%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 12.6%, better than the industry average of 9.5%. This reflects the company’s efficiency in utilizing shareholders’ fund.
Business Tailwinds
An increase in single premium policy insurance in force and higher monthly premium policy insurance in force are expected to boost primary mortgage insurance in force.
A strong purchase market and an increase in refinance originations owing to the low interest rate environment should benefit the total mortgage origination volume, which, in turn, will drive new insurance written.
Radian noted that per the recent market projections for 2021, the private mortgage insurance market is estimated to be approximately $575 million to $600 billion. It is set to be the second-highest MI volume year in history.
Radian expects improving macroeconomic conditions and a strong home purchase market, fueled by first-time homebuyers, to provide strong tailwinds for long-term growth of projected future earnings of the mortgage insurance portfolio.
Lower refinance activity is likely to drive quarterly annualized persistency, which is expected to improve in the remainder of 2021.
Increases in net title premiums earned and services revenues, attributable to the title and asset management businesses as well as growth in valuation business as well as growth in the valuation business.
Radian Group maintains a strong capital position with $1 billion of total holding company liquidity, which includes the company's $ 267.5 million unsecured revolving credit facility.
In May 2021, Radian Group hiked its quarterly dividend by 12%. As of Oct 31, RDN had around $95 million of remaining repurchase authorization.
The combination of dividend payments and share repurchase represents a return of capital of approximately 82% of after-tax operating income for 2021.
Given the capital strength at Radian Guaranty as well as the financial flexibility provided by available liquidity at Radian Group, the company remains well poised to support the businesses and enhance shareholder value.
Enact Holdings’ earnings surpassed estimates in each of the last four quarters, the average beat being 5%. In the past year, ACT has lost 5.8%. The Zacks Consensus Estimate for Enact Holdings’ 2021 and 2022 earnings has moved 2.5% and 9.6% north, respectively, in the past 60 days. Enact Holdings’ expected long-term earnings growth rate is pegged at 11.1%.
In the past year, Legal & General Group has rallied 17.4%. The Zacks Consensus Estimate for Legal & General Group 2021 and 2022 earnings has moved 10.4% and 10.3% north, respectively, in the past 60 days. The Zacks Consensus Estimate for LGNNY’s 2021 and 2022 earnings implies 65.7% and 0.9% year-over-year growth, respectively.
The bottom line of Old Republic International surpassed estimates in each of the last four quarters, the average being 54.63%. In the past year, ORI has rallied 27.9%. The Zacks Consensus Estimate for Old Republic International’s 2021 and 2022 has moved 11.5% and 12.5% north, respectively, in the past 60 days.
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Here's Why You Should Hold Radian Group (RDN) in Your Portfolio
Radian Group (RDN - Free Report) has been in investors’ good books on the back of its lower refinance activity, growth in valuation business and effective capital deployment.
Growth Projections
The Zacks Consensus Estimate for Radian Group’s 2021 and 2022 earnings per share is pegged at $2.83 and $3.23, indicating a year-over-year increase of 62.6% and 13.9%, respectively.
Earnings Surprise History
Radian Group has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, with the average being 1.64%.
Zacks Rank & Price Performance
Radian Group currently has a Zacks Rank #3 (Hold). In the past year, the stock has rallied 0.6% compared with the industry’s increase of 4.1%.
Return on Equity (ROE)
The company’s ROE for the trailing 12 months is 12.6%, better than the industry average of 9.5%. This reflects the company’s efficiency in utilizing shareholders’ fund.
Business Tailwinds
An increase in single premium policy insurance in force and higher monthly premium policy insurance in force are expected to boost primary mortgage insurance in force.
A strong purchase market and an increase in refinance originations owing to the low interest rate environment should benefit the total mortgage origination volume, which, in turn, will drive new insurance written.
Radian noted that per the recent market projections for 2021, the private mortgage insurance market is estimated to be approximately $575 million to $600 billion. It is set to be the second-highest MI volume year in history.
Radian expects improving macroeconomic conditions and a strong home purchase market, fueled by first-time homebuyers, to provide strong tailwinds for long-term growth of projected future earnings of the mortgage insurance portfolio.
Lower refinance activity is likely to drive quarterly annualized persistency, which is expected to improve in the remainder of 2021.
Increases in net title premiums earned and services revenues, attributable to the title and asset management businesses as well as growth in valuation business as well as growth in the valuation business.
Radian Group maintains a strong capital position with $1 billion of total holding company liquidity, which includes the company's $ 267.5 million unsecured revolving credit facility.
In May 2021, Radian Group hiked its quarterly dividend by 12%. As of Oct 31, RDN had around $95 million of remaining repurchase authorization.
The combination of dividend payments and share repurchase represents a return of capital of approximately 82% of after-tax operating income for 2021.
Given the capital strength at Radian Guaranty as well as the financial flexibility provided by available liquidity at Radian Group, the company remains well poised to support the businesses and enhance shareholder value.
Stocks to Consider
Some better-ranked stocks from the multi-line insurance space include Enact Holdings (ACT - Free Report) , Legal & General Group (LGGNY - Free Report) and Old Republic International (ORI - 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.
Enact Holdings’ earnings surpassed estimates in each of the last four quarters, the average beat being 5%. In the past year, ACT has lost 5.8%. The Zacks Consensus Estimate for Enact Holdings’ 2021 and 2022 earnings has moved 2.5% and 9.6% north, respectively, in the past 60 days. Enact Holdings’ expected long-term earnings growth rate is pegged at 11.1%.
In the past year, Legal & General Group has rallied 17.4%. The Zacks Consensus Estimate for Legal & General Group 2021 and 2022 earnings has moved 10.4% and 10.3% north, respectively, in the past 60 days. The Zacks Consensus Estimate for LGNNY’s 2021 and 2022 earnings implies 65.7% and 0.9% year-over-year growth, respectively.
The bottom line of Old Republic International surpassed estimates in each of the last four quarters, the average being 54.63%. In the past year, ORI has rallied 27.9%. The Zacks Consensus Estimate for Old Republic International’s 2021 and 2022 has moved 11.5% and 12.5% north, respectively, in the past 60 days.