Yahoo Finance Here's Why Radian Group (RDN) Stock is an Attractive Pick Now
Radian Group Inc. RDN has been gaining momentum over the past many quarters on the back of an improving mortgage insurance portfolio, declining claims, higher interest rates, a solid capital position and effective capital deployment.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2024 earnings has moved up nearly 7.6% in the past 60 days, reflecting investors’ optimism.
Earnings Surprise History
Radian Group has a decent earnings surprise history. It surpassed estimates in each of the last four quarters, the average being 22.79%.
Zacks Rank & Price Performance
RDN currently carries a Zacks Rank #2 (Buy). The stock has gained 22.4% compared with the industry’s growth of 24.9% in the past year.
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Attractive Valuation
Radian Group’s shares are trading at a price-to-book value multiple of 1.04, which is lower than the industry average of 2.22. It also has a Value Score of B. This style score helps find the most attractive value stocks. Back-tested results have shown that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer better returns.
Business Tailwinds
Based on projections of private mortgage insurance penetration in the overall insurable mortgage market, Radian Group expects the private mortgage insurance market to be approximately $300 billion in 2024. Management anticipates a healthy purchase market in 2024, driven by ongoing homebuyer demand and an expected decline in interest rates, which are positives for mortgage insurers.
This mortgage insurer has been witnessing an increase in new business written. High-quality new insurance written, combined with strong portfolio persistency, contributed to the growth of a large and valuable insurance in-force portfolio. Higher interest rates benefited the persistency rate of the existing insurance in force. With strong persistency rates and the current positive industry pricing environment, the company expects in-force portfolio premium yield to remain stable for the remainder of 2024.
RDN has been witnessing a declining pattern of claim filings. Thus, we expect paid claims to decrease further. A decline in loss and claims will strengthen the balance sheet and hence improve its financial profile.
The company enjoys a solid capital position, banking on capital contribution, reinsurance transactions and cash position. This, in turn, aids the mortgage insurer to engage in capital payout. Riding on continued financial strength and flexibility, Radian Group declared a 9% increase in quarterly dividend in the first quarter of 2024. This is the fifth consecutive year where RDN has hiked the quarterly dividend with a total increase of 96% over the past four years. It also has $117 million remaining under its buyback authorization.
The Zacks Consensus Estimate for Radian Group’s 2024 revenues is pegged at $1.29 billion, implying a year-over-year improvement of 8.2%. The consensus estimate for 2025 revenues indicates an increase of 4.9% from the corresponding 2024 estimate.
Other Stocks to Consider
Some other top-ranked stocks from the multi-line insurance industry are Old Republic International Corporation ORI, EverQuote, Inc. EVER and RLI Corp. RLI, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Old Republic International has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 6.61%. In the past year, shares of ORI have climbed 23.7%.
The Zacks Consensus Estimate for ORI’s 2024 and 2025 revenues implies year-over-year growth of 3.8% and 4.4%, respectively.
EverQuote has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 65.16%. In the past year, shares of EVER have skyrocketed 210.3%.
The Zacks Consensus Estimate for EVER’s 2024 and 2025 revenues implies year-over-year growth of 103.2% and 270%, respectively.
RLI earnings surpassed estimates in three of the last four quarters and missed in one, the average surprise being 132.39%. In the past year, shares of RLI have gained 2.9%.
The Zacks Consensus Estimate for RLI’s 2024 and 2025 revenues implies year-over-year growth of 18.4% and 3.8%, respectively.
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RLI Corp. (RLI) : Free Stock Analysis Report
Radian Group Inc. (RDN) : Free Stock Analysis Report
EverQuote, Inc. (EVER) : Free Stock Analysis Report
Old Republic International Corporation (ORI) : Free Stock Analysis Report
