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Why Should You Hold Radian Group (RDN) in Your Portfolio?
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Radian Group (RDN - Free Report) has been gaining momentum banking on higher monthly premium policy insurance in force, an increase in refinance originations and a solid capital position.
Earnings Surprise History
Radian Group has a solid track record of beating earnings estimates in five of the last six quarters.
Zacks Rank & Price Performance
Radian Group currently has a Zacks Rank #3 (Hold). Year to date, the stock has rallied 2.7%, outperforming the industry’s increase of 2.6%.
Image Source: Zacks Investment Research
Return on Equity
RDN’s return on equity for the trailing 12 months is 14%, better than the industry average of 9.6%, expanding 570 basis points year over year. This reflects efficiency in utilizing shareholders’ funds.
Style Score
Radian Group has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
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.
For 2022, total mortgage originations are projected to be around $3 trillion, indicating growth in purchase originations and a decrease in refinance activity.
Radian noted that per the recent market projections for 2022, the private mortgage insurance market is estimated to be approximately $500 million to $550 billion.
Radian expects improving macroeconomic conditions and a strong home purchase market, fueled by first-time homebuyers, to provide strong tailwinds for the long-term growth of projected future earnings of the mortgage insurance portfolio.
With the expectation of more interest rate hikes in 2022, refinance activity is likely to decline, which, in turn, is estimated to drive further increases in portfolio persistency and boost insurance in force growth.
Net title premiums earned and services revenues are likely to gain from the title and asset management businesses as well as growth in the valuation business.
Services revenues are expected to benefit from the increase in closed orders in the title services business.
The solid performance across real estate services, asset management, and valuation products and services despite minimal foreclosure and real estate-owned activity is expected to boost the homegenius business segment.
Radian Group maintains a solid capital position, with $880 million of total holding company liquidity.
Given the capital strength at Radian Guaranty as well as the financial flexibility provided by available liquidity at Radian Group, the insurer remains well poised to support the businesses and enhance shareholder value.
The Zacks Consensus Estimate for RDN’s 2022 earnings per share is pegged at $3.28, indicating a year-over-year increase of 4.1%.
Earnings estimates for 2022 have moved up 1.5% in the past 60 days. This should instill investors' confidence in the stock.
The bottom line of Fidelity National surpassed earnings estimates in each of the last four quarters, the average being 31.73%. Year to date, the insurer has declined 16.6%.
The Zacks Consensus Estimate for Fidelity National’s 2022 earnings has moved 3.3% north, in the past 30 days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. Year to date, UFCS stock has rallied 28.4%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. Year to date, Kinsale Capital has declined 3.6%.
The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings has moved 5.9% and 8.2% north, respectively, in the past 60 days.
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Why Should You Hold Radian Group (RDN) in Your Portfolio?
Radian Group (RDN - Free Report) has been gaining momentum banking on higher monthly premium policy insurance in force, an increase in refinance originations and a solid capital position.
Earnings Surprise History
Radian Group has a solid track record of beating earnings estimates in five of the last six quarters.
Zacks Rank & Price Performance
Radian Group currently has a Zacks Rank #3 (Hold). Year to date, the stock has rallied 2.7%, outperforming the industry’s increase of 2.6%.
Image Source: Zacks Investment Research
Return on Equity
RDN’s return on equity for the trailing 12 months is 14%, better than the industry average of 9.6%, expanding 570 basis points year over year. This reflects efficiency in utilizing shareholders’ funds.
Style Score
Radian Group has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
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.
For 2022, total mortgage originations are projected to be around $3 trillion, indicating growth in purchase originations and a decrease in refinance activity.
Radian noted that per the recent market projections for 2022, the private mortgage insurance market is estimated to be approximately $500 million to $550 billion.
Radian expects improving macroeconomic conditions and a strong home purchase market, fueled by first-time homebuyers, to provide strong tailwinds for the long-term growth of projected future earnings of the mortgage insurance portfolio.
With the expectation of more interest rate hikes in 2022, refinance activity is likely to decline, which, in turn, is estimated to drive further increases in portfolio persistency and boost insurance in force growth.
Net title premiums earned and services revenues are likely to gain from the title and asset management businesses as well as growth in the valuation business.
Services revenues are expected to benefit from the increase in closed orders in the title services business.
The solid performance across real estate services, asset management, and valuation products and services despite minimal foreclosure and real estate-owned activity is expected to boost the homegenius business segment.
Radian Group maintains a solid capital position, with $880 million of total holding company liquidity.
Given the capital strength at Radian Guaranty as well as the financial flexibility provided by available liquidity at Radian Group, the insurer remains well poised to support the businesses and enhance shareholder value.
The Zacks Consensus Estimate for RDN’s 2022 earnings per share is pegged at $3.28, indicating a year-over-year increase of 4.1%.
Earnings estimates for 2022 have moved up 1.5% in the past 60 days. This should instill investors' confidence in the stock.
Stocks to Consider
Some better-ranked stocks from the insurance sector are Fidelity National Financial, Inc. (FNF - Free Report) , United Fire Group, Inc. (UFCS - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Fidelity National surpassed earnings estimates in each of the last four quarters, the average being 31.73%. Year to date, the insurer has declined 16.6%.
The Zacks Consensus Estimate for Fidelity National’s 2022 earnings has moved 3.3% north, in the past 30 days.
United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 275.45%. Year to date, UFCS stock has rallied 28.4%.
The Zacks Consensus Estimate for UFCS’ 2022 and 2023 earnings has moved 122.2% and 76.9% north, respectively, in the past 60 days.
Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average beat being 32.04%. Year to date, Kinsale Capital has declined 3.6%.
The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings has moved 5.9% and 8.2% north, respectively, in the past 60 days.