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Why Should You Stay Invested in Radian Group (RDN) Stock Now?
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Radian Group’s (RDN - Free Report) improving mortgage insurance portfolio, declining claims, well-performing homogenious segment, solid capital position, effective capital deployment along with favorable growth estimates make it worth retaining in one’s portfolio.
RDN has a decent track record of beating earnings estimates in three of the last four quarters. It has a VGM Score of A.
Zacks Rank & Price Performance
Radian Group currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 1.8% against the industry’s decrease of 0.4%.
Image Source: Zacks Investment Research
Growth Projections
The Zacks Consensus Estimate for Radian Group’s 2022 earnings is pegged at $3.60, indicating a 14.3% increase from the year-ago reported figure. The expected long-term earnings growth rate is pegged at 5%. It has a Growth Score of A.
Return on Equity
Return on equity was 17.2% in the trailing twelve months, better than the industry average of 9.3%.
Estimate Revision
The Zacks Consensus Estimate for 2022 has moved north by 2.9% in the past 30 days, reflecting analyst optimism.
Business Tailwinds
Radian’s improved mortgage insurance portfolio is expected to create a strong foundation for future earnings. Primary mortgage insurance in force should benefit from an increase in single premium policy insurance in force and a higher monthly premium policy.
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.
Given an expected higher persistency and strong NIW volume, insurance-in-force growth in 2022 is estimated to be nearly 10%. Moreover, the company remains focused on improving its mortgage insurance portfolio, the main catalyst of long-term earnings growth. For 2022, Radian estimates total mortgage originations to be nearly $3 trillion, reflecting an 8% increase in purchase originations and a 58% decrease in refinance activity. This growth in the purchase market is a positive for the mortgage insurance industry and is expected to result in another large private MI market in 2022 worth $500 billion to $550 billion.
RDN has been witnessing declining claims over the last few years. With the strong credit characteristics of the new loans insured, we expect RDN to continue to see fewer claims than before.
Strong performing real estate services, asset management, and valuation products and services despite minimal foreclosure and real estate-owned activity should drive the homegenius business segment.
Effective Capital Deployment
Radian Group enjoys a strong liquidity position that helps in effective capital deployment. A 43% increase in quarterly dividend in the first quarter of 2022 translated into the highest dividend yield in the private MI industry. Its current dividend yield of 3.8% betters the industry average of 2.4%.
Also, RDN has new two-year $400 million share buyback programs under its kitty.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has rallied 3.5%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 30 days.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.76%. In the past year, W.R. Berkley's stock has increased 38.7%.
The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 6.3% and 6.2% north, respectively, in the past 60 days.
The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 30 days. In the past year, HCI Group stock has lost 18%.
The Zacks Consensus Estimate for 2022 and 2023 earnings per share indicates year-over-year increases of 700% and 75%, respectively.
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Why Should You Stay Invested in Radian Group (RDN) Stock Now?
Radian Group’s (RDN - Free Report) improving mortgage insurance portfolio, declining claims, well-performing homogenious segment, solid capital position, effective capital deployment along with favorable growth estimates make it worth retaining in one’s portfolio.
RDN has a decent track record of beating earnings estimates in three of the last four quarters. It has a VGM Score of A.
Zacks Rank & Price Performance
Radian Group currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 1.8% against the industry’s decrease of 0.4%.
Image Source: Zacks Investment Research
Growth Projections
The Zacks Consensus Estimate for Radian Group’s 2022 earnings is pegged at $3.60, indicating a 14.3% increase from the year-ago reported figure. The expected long-term earnings growth rate is pegged at 5%. It has a Growth Score of A.
Return on Equity
Return on equity was 17.2% in the trailing twelve months, better than the industry average of 9.3%.
Estimate Revision
The Zacks Consensus Estimate for 2022 has moved north by 2.9% in the past 30 days, reflecting analyst optimism.
Business Tailwinds
Radian’s improved mortgage insurance portfolio is expected to create a strong foundation for future earnings. Primary mortgage insurance in force should benefit from an increase in single premium policy insurance in force and a higher monthly premium policy.
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.
Given an expected higher persistency and strong NIW volume, insurance-in-force growth in 2022 is estimated to be nearly 10%. Moreover, the company remains focused on improving its mortgage insurance portfolio, the main catalyst of long-term earnings growth. For 2022, Radian estimates total mortgage originations to be nearly $3 trillion, reflecting an 8% increase in purchase originations and a 58% decrease in refinance activity. This growth in the purchase market is a positive for the mortgage insurance industry and is expected to result in another large private MI market in 2022 worth $500 billion to $550 billion.
RDN has been witnessing declining claims over the last few years. With the strong credit characteristics of the new loans insured, we expect RDN to continue to see fewer claims than before.
Strong performing real estate services, asset management, and valuation products and services despite minimal foreclosure and real estate-owned activity should drive the homegenius business segment.
Effective Capital Deployment
Radian Group enjoys a strong liquidity position that helps in effective capital deployment. A 43% increase in quarterly dividend in the first quarter of 2022 translated into the highest dividend yield in the private MI industry. Its current dividend yield of 3.8% betters the industry average of 2.4%.
Also, RDN has new two-year $400 million share buyback programs under its kitty.
Stocks to Consider
Some better-ranked stocks from the insurance industry are American Financial Group, Inc. (AFG - Free Report) , W.R. Berkley Corporation (WRB - Free Report) and HCI Group, Inc. (HCI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has rallied 3.5%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 30 days.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.76%. In the past year, W.R. Berkley's stock has increased 38.7%.
The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 6.3% and 6.2% north, respectively, in the past 60 days.
The Zacks Consensus Estimate for HCI Group’s 2022 and 2023 earnings has moved 33.3% and 40% north, respectively, in the past 30 days. In the past year, HCI Group stock has lost 18%.
The Zacks Consensus Estimate for 2022 and 2023 earnings per share indicates year-over-year increases of 700% and 75%, respectively.