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Radian Group Inc. (RDN)
NYSE:RDN
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Radian Group
(NYSE:RDN)75Outperform
Positive Factors
Negative Factors
Analyst Rating
Analysts maintain an Underperform rating on RDN, suggesting more favorable upside is available elsewhere in the sector.
Leadership Change
The head of the Mortgage Insurance business is retiring, which is seen as an incremental negative for the company.
Leadership Impact
Mr. Brummer’s departure might be missed by investors and stakeholders due to his long tenure and respected leadership.
Radian Group (RDN) vs. S&P 500 (SPY)
Market Cap
$4.65B
Dividend Yield3.09%
Average Volume (3M)1.30M
Price to Earnings (P/E)8.2
Beta (1Y)0.81
Revenue Growth3.79%
EPS Growth3.86%
CountryUS
Employees1,000
SectorFinancial
Sector Strength93
IndustryInsurance
Share Statistics
EPS (TTM)3.93
Shares Outstanding145,063,140
10 Day Avg. Volume1,551,168
30 Day Avg. Volume1,299,451
Financial Highlights & Ratios
PEG Ratio2.12
Price to Book (P/B)N/A
Price to Sales (P/S)3.60
Price to Cash Flow (P/CF)-4.30
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$36.83Price Target Upside15.96% Upside
Rating ConsensusHold
Number of Analyst Covering6
Radian Group Business Overview & Revenue Model
Company DescriptionRadian Group Inc. is a financial services company headquartered in Philadelphia, Pennsylvania. It primarily operates in the mortgage and real estate sectors, offering a range of services including mortgage insurance, risk management, and real estate services. The company is a key player in the U.S. mortgage insurance industry, providing private mortgage insurance and related risk management products to mortgage lenders nationwide. Radian's offerings are designed to protect lenders from default-related losses, facilitate the sale of low-down-payment mortgages in the secondary market, and enable homebuyers to purchase homes sooner with smaller down payments.
How the Company Makes MoneyRadian Group generates revenue primarily through its mortgage insurance segment. The company earns premiums from providing private mortgage insurance to lenders, which is paid on a monthly or upfront basis by the borrower or the lender. This insurance protects lenders from potential losses if a borrower defaults on a loan. Additionally, Radian earns revenue from its Services segment, which includes real estate and title services, and flood insurance. These services cater to lenders, investors, and government-sponsored enterprises, and provide a diverse revenue stream beyond traditional mortgage insurance. The company's earnings are influenced by factors such as the volume of new insurance written, the performance of insured loans, and the overall health of the housing market. Strategic partnerships with financial institutions and participation in government programs also play a role in Radian's revenue generation.
Radian Group Financial Statement Overview
Summary
Radian Group is financially solid, with strengths in profitability and cash management. While revenue and profit growth are positive, the lack of detailed operational performance metrics suggests potential areas for transparency improvement. The balance sheet is stable, albeit with potential for more efficient asset utilization.Income Statement
Radian Group shows a strong gross profit margin with consistent revenue growth over the years. However, the absence of EBIT and EBITDA figures in the latest year reduces visibility into operational efficiency. The net profit margin is healthy, indicating effective cost management.78
Positive
Balance Sheet
The company maintains a solid equity base with a moderate debt-to-equity ratio, indicative of prudent financial leverage. However, there is room for improvement in terms of asset utilization efficiency, as evidenced by a stable return on equity.75
Positive
Cash Flow
Radian Group demonstrates robust cash flow generation with positive operating cash flow and free cash flow. The free cash flow to net income ratio is strong, reflecting effective cash management practices. However, the decline in operating cash flow compared to previous years is a point of concern.82
Very Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.29B | 1.24B | 1.19B | 1.33B | 1.44B | Gross Profit |
| 1.25B | 854.52M | 727.22M | 902.53M | 1.07B | EBIT |
| 0.00 | 880.07M | 485.65M | 761.42M | 475.84M | EBITDA |
| 0.00 | 0.00 | 1.06B | 868.53M | 572.74M | Net Income Common Stockholders |
| 604.44M | 603.12M | 742.93M | 600.67M | 393.63M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 521.65M | 19.00M | 56.18M | 151.15M | 87.92M | Total Assets |
| 8.66B | 7.59B | 7.06B | 7.84B | 7.95B | Total Debt |
| 703.53M | 1.54B | 1.57B | 1.56B | 1.58B | Net Debt |
| 181.88M | 1.52B | 1.51B | 1.41B | 1.49B | Total Liabilities |
| 4.04B | 3.20B | 3.14B | 1.90B | 1.80B | Stockholders Equity |
| 4.62B | 4.40B | 3.92B | 4.26B | 4.28B |
| Cash Flow | Free Cash Flow | |||
| 246.88M | 513.15M | 370.63M | 544.51M | 641.42M | Operating Cash Flow |
| 246.88M | 529.43M | 388.30M | 557.11M | 658.43M | Investing Cash Flow |
| 551.11M | -300.84M | -5.17M | -1.86M | -883.18M | Financing Cash Flow |
| -794.41M | -265.09M | -479.18M | -496.78M | 222.62M |
Radian Group Technical Analysis
Negative
31.76
Price Trends
32.43
Negative
33.15
Negative
32.98
Negative
Market Momentum
-0.14
Positive
40.19
Neutral
28.91
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RDN, the sentiment is Negative. The current price of 31.76 is below the 20-day moving average (MA) of 32.53, below the 50-day MA of 32.43, and below the 200-day MA of 32.98, indicating a bearish trend. The MACD of -0.14 indicates Positive momentum. The RSI at 40.19 is Neutral, neither overbought nor oversold. The STOCH value of 28.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for RDN.
Radian Group Risk Analysis
Radian Group disclosed 34 risk factors in its most recent earnings report. Radian Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Radian Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $34.48B | 8.16 | 22.02% | ― | 26.24% | -3.87% | |
80 Outperform | $5.81B | 8.17 | 13.63% | 2.00% | 17.11% | 11.19% | |
75 Outperform | $4.65B | 8.17 | 13.40% | 3.09% | 3.79% | 3.86% | |
75 Outperform | $2.80B | 8.08 | 17.38% | ― | 13.40% | 18.52% | |
71 Outperform | $5.73B | 8.17 | 14.75% | 2.14% | 4.52% | 15.94% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% | |
57 Neutral | $2.78B | 9.97 | 3.87% | ― | -4.81% | -74.30% |
* Financial Sector Average
Performance Comparison
RDN
Radian Group
31.76
3.00
10.43%
ACGL
Arch Capital Group
91.35
7.97
9.56%
GNW
Genworth Financial
6.64
0.46
7.44%
MTG
MGIC Investment
23.74
4.42
22.88%
ESNT
Essent Group
55.87
2.93
5.53%
NMIH
NMI Holdings
35.47
6.17
21.06%
Radian Group Earnings Call Summary
Earnings Call Date: Feb 5, 2025 | % Change Since: -6.48% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
Radian Group reported a strong financial performance in 2024, with significant achievements in net income, book value per share, and capital returns to shareholders. The company successfully managed its operating expenses and maintained high persistency rates in its insurance portfolio. However, there were some challenges, including an increase in default inventory and impairment charges related to restructuring efforts in the HomeGenius business. Overall, the positive aspects of the earnings call outweigh the challenges.Highlights
Record Net Income and Return on Equity
Radian Group generated net income of $604 million for the full year 2024, with a return on equity of 13.4%.
Increase in Book Value Per Share
The company increased book value per share by 9% year over year, reaching $31.33.
All-Time High in Primary Mortgage Insurance In Force
Primary mortgage insurance in force reached an all-time high of $275 billion, growing 2% year over year.
Strong Capital Returns to Shareholders
Radian returned $376 million of capital to stockholders through share repurchases and dividends in 2024.
High Persistency Rate
The persistency rate of existing insurance in force remained high at 83.6% in the fourth quarter.
Reduction in Operating Expenses
Radian significantly reduced its recurring expense structure, with an 8% reduction in operating expenses year over year.
Strong Financial Position and Liquidity
Radian Guaranty maintained a PMIERs cushion of $2.2 billion and available holding company liquidity of $885 million.
Investment Portfolio Performance
Radian's investment portfolio generated net investment income of $71 million in the fourth quarter, with a yield of 3.9%.
Positive Credit Trends
Radian reported a net benefit of $2.2 million in its insurance provision for losses for the full year, with continued strong cure activity and low claim levels.
Lowlights
Slight Increase in Default Inventory
The ending default inventory for 2024 increased to approximately 24,000 loans, resulting in a portfolio default rate of 2.44% compared to 2.20% at year-end 2023.
Impairment Charges
Fourth quarter operating expenses included $13 million related to impairment to internal-use software and lease-related assets.
Challenges in HomeGenius Business
HomeGenius business underwent restructuring, with related expenses and impairments impacting financial results.
Company Guidance
During the Radian Group's fourth quarter 2024 earnings call, several key metrics were highlighted. The company reported a 9% increase in book value per share year over year, with net income reaching $604 million, equating to a return on equity of 13.4%. Radian returned $376 million to shareholders through share repurchases and dividends. The primary mortgage insurance in force hit an all-time high of $275 billion, aided by a high persistency rate of 83.6%. The company also exceeded its initial guidance for dividends from Radian Guaranty, distributing $675 million. Additionally, Radian's investment portfolio stood at $6.5 billion, generating a net investment income of $71 million in the fourth quarter. Operational efficiency was underscored by an 8% reduction in operating expenses year over year. The call also touched on the stable housing market outlook, supported by constrained housing supply and favorable interest rate conditions.Radian Group Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Radian Group Expands Board with Reinsurance Expert
Positive
Feb 12, 2025
On February 10, 2025, Radian Group expanded its Board of Directors from eleven to twelve members by appointing Jed Rhoads, a seasoned reinsurance executive with over 40 years of experience, including senior roles at Markel Group. Rhoads’ extensive background in reinsurance aligns with Radian’s strategic goals, and his expertise is expected to enhance the Board’s capability to guide the company in transforming risk into opportunity.
Executive/Board Changes
Radian Group Announces Leadership Changes in Mortgage Insurance
Neutral
Jan 13, 2025
Radian Group announced that Derek V. Brummer, President of Mortgage Insurance, will retire on July 3, 2025, after 23 years with the company. Sumita Pandit, the current CFO, will succeed him, overseeing the mortgage insurance business alongside her CFO responsibilities. Pandit, with extensive experience in fintech and investment banking, joined Radian in 2023 and is expected to continue the company’s strategic goals and enhance stakeholder value.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.