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Radian (RDN) Up 7.2% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Radian (RDN - Free Report) . Shares have added about 7.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Radian due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Radian Group Q1 Earnings Top Estimates, Decrease Y/Y
Radian Group Inc. reported first-quarter 2023 adjusted operating income of 98 cents per share, which beat the Zacks Consensus Estimate by 29%. However, the bottom line decreased 16.2% year over year.
Operating revenues decreased 8.8% year over year to $294.1 million due to lower net premiums earned and services revenues. However, the metric beat the Zacks Consensus Estimate by 62.2%.
The results reflected higher monthly premium policy insurance in force and a decline in single premium policy insurance in force, partially offset by higher expenses.
Quarter in Details
Net premiums earned were $233.2 million, down 8.3% year over year. Net investment income increased 55% year over year to $59.2 million.
MI New Insurance Written decreased 39.6% year over year to $11.3 billion. Primary mortgage insurance in force was $261.5 billion as of Mar 31, 2023, up 5% year over year. The year-over-year change reflects an 8% increase in monthly premium policy insurance in force and a 12% decline in single premium policy insurance in force.
Persistency — the percentage of mortgage insurance in force that remains in the company’s books after a 12-month period — was 82% as of Mar 31, 2023, up 1400 basis points (bps) year over year.
Primary delinquent loans were 20,748 as of Mar 31, 2023, down 18.7% year over year.
Total expenses increased 81.2% year over year to $106.6 million on account of higher interest expenses, amortization of other acquired intangible assets and lower provision for losses. The expense ratio was 25.9, an improvement of 130 bps from the year-ago quarter.
Segmental Update
The Mortgage segment reported a year-over-year decrease of 1.6% in total revenues to $279.9 million. Net premiums earned by the segment were $231.5 million, down 5.6% year over year. Claims paid were $3 million, which decreased 40% year over year. The loss ratio was 7.3 compared with (34.3) in the year-ago quarter.
The homegenius segment’s revenues of $13 million decreased 61.8% year over year. Net premiums earned by the segment were $1.8 million, which decreased 80.2% year over year. Adjusted pre-tax operating loss was $23 million, wider than the prior-year quarter loss of $13.5 million.
Financial Update
As of Mar 31, 2023, Radian Group had a solid cash balance of $50.2 million, down from $56.2 billion at 2022-end. The debt-to-capital ratio improved 90 bps to 25.6 from the 2022-end level. Book value per share, a measure of net worth, climbed 5.1% year over year to $26.23 as of Mar 31, 2023.
In the first quarter, the adjusted net operating return on equity was 15.7%, which deteriorated 420 bps year over year. The risk-to-capital ratio of Radian Guaranty as of the first-quarter end was 10.6:1, lower than 10.7:1 from the 2022-end level. Excess available resources to support PMIERs of $5.7 billion were 44% higher than Radian Guaranty's minimum required assets.
Share Repurchase and Dividend Update
Radian bought back 716 thousand shares worth $15 million, including commissions, in the first quarter. Radian also bought back an additional 229 thousand shares in April 2023 for $5 million, including commissions. The remaining repurchase capacity stood at $280 million as of Mar 31, 2023. The board of directors paid a quarterly dividend of 22.5 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Radian has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Radian has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Radian is part of the Zacks Insurance - Multi line industry. Over the past month, The Hartford (HIG - Free Report) , a stock from the same industry, has gained 1%. The company reported its results for the quarter ended March 2023 more than a month ago.
The Hartford reported revenues of $3.92 billion in the last reported quarter, representing a year-over-year change of +8.6%. EPS of $1.68 for the same period compares with $1.66 a year ago.
The Hartford is expected to post earnings of $1.90 per share for the current quarter, representing a year-over-year change of -11.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for The Hartford. Also, the stock has a VGM Score of B.
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Radian (RDN) Up 7.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Radian (RDN - Free Report) . Shares have added about 7.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Radian due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Radian Group Q1 Earnings Top Estimates, Decrease Y/Y
Radian Group Inc. reported first-quarter 2023 adjusted operating income of 98 cents per share, which beat the Zacks Consensus Estimate by 29%. However, the bottom line decreased 16.2% year over year.
Operating revenues decreased 8.8% year over year to $294.1 million due to lower net premiums earned and services revenues. However, the metric beat the Zacks Consensus Estimate by 62.2%.
The results reflected higher monthly premium policy insurance in force and a decline in single premium policy insurance in force, partially offset by higher expenses.
Quarter in Details
Net premiums earned were $233.2 million, down 8.3% year over year. Net investment income increased 55% year over year to $59.2 million.
MI New Insurance Written decreased 39.6% year over year to $11.3 billion.
Primary mortgage insurance in force was $261.5 billion as of Mar 31, 2023, up 5% year over year. The year-over-year change reflects an 8% increase in monthly premium policy insurance in force and a 12% decline in single premium policy insurance in force.
Persistency — the percentage of mortgage insurance in force that remains in the company’s books after a 12-month period — was 82% as of Mar 31, 2023, up 1400 basis points (bps) year over year.
Primary delinquent loans were 20,748 as of Mar 31, 2023, down 18.7% year over year.
Total expenses increased 81.2% year over year to $106.6 million on account of higher interest expenses, amortization of other acquired intangible assets and lower provision for losses. The expense ratio was 25.9, an improvement of 130 bps from the year-ago quarter.
Segmental Update
The Mortgage segment reported a year-over-year decrease of 1.6% in total revenues to $279.9 million. Net premiums earned by the segment were $231.5 million, down 5.6% year over year. Claims paid were $3 million, which decreased 40% year over year. The loss ratio was 7.3 compared with (34.3) in the year-ago quarter.
The homegenius segment’s revenues of $13 million decreased 61.8% year over year. Net premiums earned by the segment were $1.8 million, which decreased 80.2% year over year. Adjusted pre-tax operating loss was $23 million, wider than the prior-year quarter loss of $13.5 million.
Financial Update
As of Mar 31, 2023, Radian Group had a solid cash balance of $50.2 million, down from $56.2 billion at 2022-end. The debt-to-capital ratio improved 90 bps to 25.6 from the 2022-end level. Book value per share, a measure of net worth, climbed 5.1% year over year to $26.23 as of Mar 31, 2023.
In the first quarter, the adjusted net operating return on equity was 15.7%, which deteriorated 420 bps year over year. The risk-to-capital ratio of Radian Guaranty as of the first-quarter end was 10.6:1, lower than 10.7:1 from the 2022-end level. Excess available resources to support PMIERs of $5.7 billion were 44% higher than Radian Guaranty's minimum required assets.
Share Repurchase and Dividend Update
Radian bought back 716 thousand shares worth $15 million, including commissions, in the first quarter. Radian also bought back an additional 229 thousand shares in April 2023 for $5 million, including commissions. The remaining repurchase capacity stood at $280 million as of Mar 31, 2023. The board of directors paid a quarterly dividend of 22.5 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
At this time, Radian has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Radian has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Radian is part of the Zacks Insurance - Multi line industry. Over the past month, The Hartford (HIG - Free Report) , a stock from the same industry, has gained 1%. The company reported its results for the quarter ended March 2023 more than a month ago.
The Hartford reported revenues of $3.92 billion in the last reported quarter, representing a year-over-year change of +8.6%. EPS of $1.68 for the same period compares with $1.66 a year ago.
The Hartford is expected to post earnings of $1.90 per share for the current quarter, representing a year-over-year change of -11.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for The Hartford. Also, the stock has a VGM Score of B.