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Here's Why You Should Hold On to Radian Group (RDN) Stock
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Radian Group Inc. (RDN - Free Report) has been gaining momentum on the back of strong-performing real estate services, high levels of the new mortgage insurance business and prudent capital deployment.
Earnings Surprise History
Radian Group has a decent earnings surprise history. It surpassed estimates in each of the last four quarters, the average being 38.62%.
Zacks Rank & Price Performance
Radian Group currently has a Zacks Rank #3 (Hold). The stock has lost 9.8% compared with the industry’s decrease of 0.3% 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 8.4%. This reflects efficiency in utilizing shareholders’ funds.
Business Tailwinds
Radian remains focused on improving its mortgage insurance portfolio, the main catalyst of long-term earnings growth, growing the Homegenius business and managing capital resources, the three strategic value creation areas.
The growth in the purchase market is a positive for the mortgage insurance industry. Persistency should improve given higher mortgage interest rates.
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 Radian Group's future earnings.
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.
Radian strengthened available liquidity by issuing $525 million of senior notes due 2025 and executing mortgage insurance-linked notes, reinsurance transactions for $484 million. As of Dec 31, 2022, Radian Group maintained $1.2 billion of available liquidity. Also, the company has been effectively trying to lower its debt level over the last few years.
Riding on continued financial strength and flexibility, Radian declared a 22.5% increase in quarterly dividend in the first quarter of 2023. This is the fourth consecutive year where RDN has increased the quarterly dividend with a total increase of 80% over the past three years. The board had approved a new two-year $300 million share buyback program in January 2023. In 2022, Radian bought back shares worth $400.2 million.
James River’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 17.20%.
The Zacks Consensus Estimate for JRVR’s 2023 and 2024 earnings implies a respective year-over-year rise of 16.2% and 13.9%. In the past year, JRVR has gained 18.2%.
Lemonade’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 13.57%. In the past year, LMND has lost 23.7%.
The Zacks Consensus Estimate for LMND’s 2023 and 2024 earnings implies a respective year-over-year rise of 6.5% and 8.5%.
The Zacks Consensus Estimate for Prudential Financial’s 2023 and 2024 earnings implies a respective year-over-year rise of 28.9% and 4.1%. In the past year, PRU has lost 7.9%.
The Zacks Consensus Estimate for PRU’s 2023 and 2024 earnings has moved 2.9% and 0.1% north, respectively, in the past 30 days.
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Here's Why You Should Hold On to Radian Group (RDN) Stock
Radian Group Inc. (RDN - Free Report) has been gaining momentum on the back of strong-performing real estate services, high levels of the new mortgage insurance business and prudent capital deployment.
Earnings Surprise History
Radian Group has a decent earnings surprise history. It surpassed estimates in each of the last four quarters, the average being 38.62%.
Zacks Rank & Price Performance
Radian Group currently has a Zacks Rank #3 (Hold). The stock has lost 9.8% compared with the industry’s decrease of 0.3% 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 8.4%. This reflects efficiency in utilizing shareholders’ funds.
Business Tailwinds
Radian remains focused on improving its mortgage insurance portfolio, the main catalyst of long-term earnings growth, growing the Homegenius business and managing capital resources, the three strategic value creation areas.
The growth in the purchase market is a positive for the mortgage insurance industry. Persistency should improve given higher mortgage interest rates.
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 Radian Group's future earnings.
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.
Radian strengthened available liquidity by issuing $525 million of senior notes due 2025 and executing mortgage insurance-linked notes, reinsurance transactions for $484 million. As of Dec 31, 2022, Radian Group maintained $1.2 billion of available liquidity. Also, the company has been effectively trying to lower its debt level over the last few years.
Riding on continued financial strength and flexibility, Radian declared a 22.5% increase in quarterly dividend in the first quarter of 2023. This is the fourth consecutive year where RDN has increased the quarterly dividend with a total increase of 80% over the past three years. The board had approved a new two-year $300 million share buyback program in January 2023. In 2022, Radian bought back shares worth $400.2 million.
Stocks to Consider
Some better-ranked stocks from the multi-line insurance industry are James River Group Holdings, Ltd. (JRVR - Free Report) , Lemonade, Inc. (LMND - Free Report) and Prudential Financial, Inc. (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.
James River’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 17.20%.
The Zacks Consensus Estimate for JRVR’s 2023 and 2024 earnings implies a respective year-over-year rise of 16.2% and 13.9%. In the past year, JRVR has gained 18.2%.
Lemonade’s earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 13.57%. In the past year, LMND has lost 23.7%.
The Zacks Consensus Estimate for LMND’s 2023 and 2024 earnings implies a respective year-over-year rise of 6.5% and 8.5%.
The Zacks Consensus Estimate for Prudential Financial’s 2023 and 2024 earnings implies a respective year-over-year rise of 28.9% and 4.1%. In the past year, PRU has lost 7.9%.
The Zacks Consensus Estimate for PRU’s 2023 and 2024 earnings has moved 2.9% and 0.1% north, respectively, in the past 30 days.