Yahoo Finance Why Is Radian (RDN) Up 0.7% Since Last Earnings Report?
A month has gone by since the last earnings report for Radian (RDN). Shares have added about 0.7% in that time frame, underperforming 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 Surpass on Higher Premiums
Radian Group Inc. reported first-quarter 2024 adjusted operating income of $1.03 per share, which beat the Zacks Consensus Estimate by 24%. The bottom line increased 5.1% year over year. The results reflected improved persistency and a rise in premiums and insurance written, partially offset by higher expenses.
Quarter in Details
Operating revenues rose 4.8% year over year to $318.9 million, primarily due to higher net premiums earned, services revenues and net investment income. Net premiums earned were $235.8 million, up 1.1% year over year. Net investment income jumped 18.4% year over year to $69.2 million.
MI New Insurance Written rose 2.4% year over year to $11.5 billion. Primary mortgage insurance in force was $271 billion as of Mar 31, 2024, up 4% year over year.
Persistency — the percentage of mortgage insurance in force that remains in the company’s books after a 12-month period — was 84% as of Mar 31, 2024, up 200 basis points (bps) year over year. Primary delinquent loans were 20,850 as of Mar 31, 2024, up 0.5% year over year.
Total expenses climbed 14% year over year to $120.8 million on account of higher policy acquisition costs and interest expenses. The expense ratio was 25, which improved 90 bps from the year-ago quarter.
Segmental Update
The Mortgage segment reported a year-over-year increase of 2% in total revenues to $285 million. Net premiums earned by the segment were $233 million, up 1.1% year over year. Claims paid were $3 million, which remained flat year over year. The loss ratio was (2.9) compared with (7.3) in the year-ago quarter.
The All Other segment reported a year-over-year increase of 37.2% in total revenues to $34.4 million. Net premiums earned by the segment were $1.8 million, up 3.9% year over year. Net investment income grew 57.6% year over year to $19.6 million. Adjusted pretax operating loss was $7 million, narrower than the year-ago loss of $14.8 million.
Financial Update
As of Mar 31, 2024, Radian Group had a solid cash balance of $26.9 million, up 42% from the end of 2023. The debt-to-capital ratio deteriorated 100 bps to 25.4 from the 2023-end level.
Book value per share, a measure of net worth, climbed 11.7% year over year to $29.30 as of Mar 31, 2024. In the first quarter, the adjusted net operating return on equity was 14.5%, which contracted 120 bps year over year.
As of Mar 31, 2024, Available Assets under PMIERs totaled nearly $6 billion, which resulted in PMIERs excess Available Assets of $2.3 billion.
Share Repurchase and Dividend Update
Radian Group bought back 1.8 million shares worth $50 million, including commissions, in the first quarter. The remaining repurchase capacity was $117 million as of Mar 31, 2024. The board raised the quarterly dividend by 9% to 24.5 cents per share. Total dividend paid to stockholders was $37 million as of Mar 12, 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -5.88% due to these changes.
VGM Scores
At this time, Radian has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, 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, Prudential (PRU), a stock from the same industry, has gained 6.5%. The company reported its results for the quarter ended March 2024 more than a month ago.
Prudential reported revenues of $21.7 billion in the last reported quarter, representing a year-over-year change of +43.7%. EPS of $3.12 for the same period compares with $2.66 a year ago.
For the current quarter, Prudential is expected to post earnings of $3.44 per share, indicating a change of +17% from the year-ago quarter. The Zacks Consensus Estimate has changed +1.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Prudential. Also, the stock has a VGM Score of A.
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Radian Group Inc. (RDN) : Free Stock Analysis Report
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