Radian Group RDN has been gaining momentum, given higher persistence, increase in new insurance written volumes and a solid capital position.
Earnings Surprise History
Radian Group has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed the same in one, with the average being 11.75%.
Zacks Rank & Price Performance
Radian Group currently has a Zacks Rank #3 (Hold). In the past year, the stock has rallied 1.2% compared to the industry’s decrease of 14.3%.
Image Source: Zacks Investment Research
Return on Equity
RDN’s return on equity for the trailing 12 months is 14%, better than the industry average of 9.6%, expanding 570 basis points year over year. This reflects efficiency in utilizing shareholders’ funds.
Radian Group has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Earnings estimates for 2022 have moved up nearly 0.9% in the past seven days. This should instill investors’ confidence in the stock.
Continued high levels of the new mortgage insurance business, as well as an increase in persistency, are likely to bolster the primary insurance in force, the main driver of future earnings for Radian Group.
With the expectation of rising interest rates in 2022, refinance activity is likely to decline, which, in turn, is estimated to drive further increases in portfolio persistency and boost insurance in force growth.
Given the expected higher persistence and strong new insurance written volumes, RDN expects insurance in force growth of nearly 10% for 2022.
For 2022, total mortgage originations are projected at around $3 trillion, indicating growth in purchase originations and a decrease in refinance activity. This growth in the purchase market is an upside for the mortgage insurance industry and is likely to result in another large private Mortgage Insurance market in 2022 of $500 billion to $550 billion.
Net premiums earned should gain from an increase in new title policies written and closed orders in the title insurance business.
Services revenues are expected to benefit from the increase in closed orders in the title services business.
In 2021, Radian Group witnessed solid growth in the title business, which grew 73% year over year.
The solid performance across real estate services, asset management, and valuation products and services despite minimal foreclosure and real estate owned activity is expected to boost the homegenius business segment.
The multiline insurer continues to strengthen capital and liquidity along with enhancing financial flexibility. Radian Group maintained a solid capital position, with $880 million of total holding company liquidity. Radian Guaranty’s PMIERs Excess Available Assets grew 19% from the third quarter of 2021 to more than $2 billion in the fourth quarter of 2021.
The Zacks Consensus Estimate for RDN’s 2022 earnings per share is pegged at $3.28, indicating a year-over-year increase of 4.1%.
Stocks to Consider
Some better-ranked multiline insurers include Horace Mann Educators HMN, Aegon AEG and CNO Financial Group CNO. While Horace Mann sports a Zacks Rank #1 (Strong Buy), Aegon and CNO Financial each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Horace Mann’s earnings surpassed estimates in each of the last four quarters, the average beat being 22.8%. In the past year, Horace Mann has declined 6.5%.
The Zacks Consensus Estimate for HMN’s 2022 and 2023 earnings has moved 8.3% and 11% north, respectively, in the past 60 days.
Aegon’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 75%. In the past year, Aegon has declined 12.6%.
The Zacks Consensus Estimate for AEG’s 2023 earnings has moved 13.9% north, respectively, in the past 60 days.
The bottom line of CNO Financial surpassed earnings estimates in each of the last four quarters, the average being 25.48%. In the past year, CNO Financial has declined 11%.
The Zacks Consensus Estimate for CNO’s 2022 and 2023 earnings has moved 0.4% and 0.3% north, respectively, in the past seven days.
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