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Here's Why Radian Group (RDN) Stock is an Attractive Bet Now
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Radian Group Inc. (RDN - Free Report) has been gaining momentum banking on higher persistency, strong-performing real estate services, asset management, valuation products and sufficient liquidity.
Earnings Surprise History
Radian Group has a decent earnings surprise history. It beat earnings estimates in six of the last seven quarters.
Zacks Rank & Price Performance
Radian Group currently has a Zacks Rank #2 (Buy). The stock has lost 7.5% compared with the industry’s decline of 3.4% in the past year.
Image Source: Zacks Investment Research
Return on Equity
RDN’s return on equity for the trailing 12 months is 22.7%, better than the industry average of 8.3% and expanding 1010 basis points year over year. This reflects efficiency in utilizing shareholders’ funds.
Business Tailwinds
Radian’s homegenius business segment should continue to benefit from strong-performing real estate services, asset management and valuation products and services despite minimal foreclosure and real estate-owned activities.
Continued high levels of the new mortgage insurance business, as well as an increase in persistency, are likely to drive the primary insurance in force, the main driver of future earnings for Radian Group.
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.
Based on the most recent origination projections for 2022, Radian expects the private mortgage insurance (MI) market to be approximately $400 billion to $450 billion, which would represent the third-largest MI volume year in history.
Radian Group’s solid liquidity aids in effective capital deployment. Its current dividend yield of 4.3% is better than the industry average of 2.2%. The board had approved a new two-year $400 million share buyback program in February 2022. In the first nine months of 2022, Radian bought back shares worth $400.1 million and another $0.9 million worth in October, exhausting its authorization.
Radian Group has an impressive Value Score of A. The insurer currently has a trailing 12-month P/B ratio of 0.81, lower than the industry range of 2.93. Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities.
The Zacks Consensus Estimate for RDN’s 2022 earnings per share is pegged at $4.71, indicating a year-over-year increase of 49.5%.
The Zacks Consensus Estimate for 2022 has moved north by 12.7% in the past 60 days, reflecting analyst optimism.
MGIC Investment’s earnings surpassed estimates in each of the last four quarters, the average being 36.34%. In the past year, MGIC Investment has lost 6.4%.
The Zacks Consensus Estimate for MTG’s 2022 and 2023 earnings has moved 12.1% and 0.4% north, respectively, in the past 60 days.
Allianz’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 12.96%. In the past year, the insurer has lost 7.3%.
The Zacks Consensus Estimate for ALIZY’s 2022 and 2023 earnings has moved 1.8% and 1.6% north, respectively, in the past 30 days.
Root delivered a trailing four-quarter average earnings surprise of 22.44%. In the past year, ROOT has lost 91.1%.
The Zacks Consensus Estimate for ROOT’s 2022 and 2023 earnings indicates a respective year-over-year increase of 44.7% and 23.9%.
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Here's Why Radian Group (RDN) Stock is an Attractive Bet Now
Radian Group Inc. (RDN - Free Report) has been gaining momentum banking on higher persistency, strong-performing real estate services, asset management, valuation products and sufficient liquidity.
Earnings Surprise History
Radian Group has a decent earnings surprise history. It beat earnings estimates in six of the last seven quarters.
Zacks Rank & Price Performance
Radian Group currently has a Zacks Rank #2 (Buy). The stock has lost 7.5% compared with the industry’s decline of 3.4% in the past year.
Image Source: Zacks Investment Research
Return on Equity
RDN’s return on equity for the trailing 12 months is 22.7%, better than the industry average of 8.3% and expanding 1010 basis points year over year. This reflects efficiency in utilizing shareholders’ funds.
Business Tailwinds
Radian’s homegenius business segment should continue to benefit from strong-performing real estate services, asset management and valuation products and services despite minimal foreclosure and real estate-owned activities.
Continued high levels of the new mortgage insurance business, as well as an increase in persistency, are likely to drive the primary insurance in force, the main driver of future earnings for Radian Group.
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.
Based on the most recent origination projections for 2022, Radian expects the private mortgage insurance (MI) market to be approximately $400 billion to $450 billion, which would represent the third-largest MI volume year in history.
Radian Group’s solid liquidity aids in effective capital deployment. Its current dividend yield of 4.3% is better than the industry average of 2.2%. The board had approved a new two-year $400 million share buyback program in February 2022. In the first nine months of 2022, Radian bought back shares worth $400.1 million and another $0.9 million worth in October, exhausting its authorization.
Radian Group has an impressive Value Score of A. The insurer currently has a trailing 12-month P/B ratio of 0.81, lower than the industry range of 2.93. Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities.
The Zacks Consensus Estimate for RDN’s 2022 earnings per share is pegged at $4.71, indicating a year-over-year increase of 49.5%.
The Zacks Consensus Estimate for 2022 has moved north by 12.7% in the past 60 days, reflecting analyst optimism.
Other Stocks to Consider
Some top-ranked stocks from the insurance industry are MGIC Investment Corporation (MTG - Free Report) , Allianz SE (ALIZY - Free Report) and Root, Inc. (ROOT - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
MGIC Investment’s earnings surpassed estimates in each of the last four quarters, the average being 36.34%. In the past year, MGIC Investment has lost 6.4%.
The Zacks Consensus Estimate for MTG’s 2022 and 2023 earnings has moved 12.1% and 0.4% north, respectively, in the past 60 days.
Allianz’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 12.96%. In the past year, the insurer has lost 7.3%.
The Zacks Consensus Estimate for ALIZY’s 2022 and 2023 earnings has moved 1.8% and 1.6% north, respectively, in the past 30 days.
Root delivered a trailing four-quarter average earnings surprise of 22.44%. In the past year, ROOT has lost 91.1%.
The Zacks Consensus Estimate for ROOT’s 2022 and 2023 earnings indicates a respective year-over-year increase of 44.7% and 23.9%.