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Why Is Radian (RDN) Down 5.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Radian (RDN - Free Report) . Shares have lost about 5.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Radian due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Radian Group Beats on Q4 Earnings, Raises Dividend
Radian Group Inc. reported fourth-quarter 2021 adjusted operating income of $1.07 per share, which beat the Zacks Consensus Estimate by 46.6%. The bottom line increased 55.1% year over year.
The results reflected strong growth in the housing and real estate markets along with sustained demand for products and services.
Quarter in Details
Operating revenues decreased 11.7% year over year to $300 million due to lower net premiums earned and net investment income.
Net premiums earned were $261.4 million, down 13.5% year over year. Net investment income slumped 1.9% year over year to $37.4 million. MI New Insurance Written decreased 20.5% year over year to $23.7 billion.
Primary mortgage insurance in force was $246 billion as of Dec 31, 2021, down 1% year over year. The year-over-year decrease reflects a 5.8% increase in monthly premium policy insurance in force offset by a 21.1% 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 64.3% as of Dec 31, 2021, up 310 basis points (bps) year over year.
Primary delinquent loans were 29,061 as of Dec 31, 2021, down 47.1% year over year.
Total expenses decreased 51.8% year over year to $164.1 million on account of lower provision for losses, operating cost and policy acquisition costs. The expense ratio was 25.6, a deterioration from 20.6 in the year-ago quarter.
Segmental Update
The Mortgage segment reported a year-over-year decrease of 11.3% in total revenues to $246.6 million. Net premiums earned by the segment were $249.7 million, down 13% year over year. Claims paid were $10.4 million, down 74.4% year over year. The loss ratio was (18.6) against 19.6 in the year-ago quarter.
The homegenius segment’s revenues of $44.7 million climbed 89.4% year over year. Net premiums earned by the segment were $11.8 million, which surged 55.5% year over year. Adjusted pre-tax operating loss was $2.1 million, narrower than the prior-year quarter loss of $11.1 million.
Full-Year Highlights
Adjusted operating income of $3.16 per share beat the Zacks Consensus Estimate of $2.83. The bottom line increased 58% year over year. Total revenues came in at $1.3 billion, down 4.5% year over year.
New insurance written of $91.8 billion decreased 12.6% from 2020, the second-highest annual volume. The loss ratio was 1.9 against 44.2 in 2020 while the expense ratio was 25.3, a deterioration from 21 in 2020.
Financial Update
As of Dec 31, 2021, Radian Group had a solid cash balance of $152.6 million, up 62.1% from the 2020-end level. The debt-to-capital ratio deteriorated 20 bps to 24.9 from the 2020-end level.
Book value per share, a measure of net worth, climbed 8.6% year over year to $24.28 as of Dec 31, 2021. In 2021, the adjusted net operating return on equity was 14.2% compared with 8.2% in the year-ago quarter.
The risk-to-capital ratio of Radian Guaranty as of third-quarter end was 11.9:1, lower than 12.7:1 from the 2020-end level. Excess available resources to support PMIERs of $2.1 billion were 62% higher than Radian Guaranty's minimum required assets.
Share Repurchase and Dividend Update
Radian bought back 17.8 million shares worth $399.1 million in 2021. The board of directors paid a quarterly dividend of 14 cents per share.
The board approved a $400 million share buyback program and an increase of 43% in the quarterly dividend to 20 cents per share. The dividend will be paid out on Mar 3, 2022, to stockholders of record as of Feb 21, 2022
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Radian has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Radian (RDN) Down 5.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Radian (RDN - Free Report) . Shares have lost about 5.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Radian due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Radian Group Beats on Q4 Earnings, Raises Dividend
Radian Group Inc. reported fourth-quarter 2021 adjusted operating income of $1.07 per share, which beat the Zacks Consensus Estimate by 46.6%. The bottom line increased 55.1% year over year.
The results reflected strong growth in the housing and real estate markets along with sustained demand for products and services.
Quarter in Details
Operating revenues decreased 11.7% year over year to $300 million due to lower net premiums earned and net investment income.
Net premiums earned were $261.4 million, down 13.5% year over year. Net investment income slumped 1.9% year over year to $37.4 million. MI New Insurance Written decreased 20.5% year over year to $23.7 billion.
Primary mortgage insurance in force was $246 billion as of Dec 31, 2021, down 1% year over year. The year-over-year decrease reflects a 5.8% increase in monthly premium policy insurance in force offset by a 21.1% 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 64.3% as of Dec 31, 2021, up 310 basis points (bps) year over year.
Primary delinquent loans were 29,061 as of Dec 31, 2021, down 47.1% year over year.
Total expenses decreased 51.8% year over year to $164.1 million on account of lower provision for losses, operating cost and policy acquisition costs. The expense ratio was 25.6, a deterioration from 20.6 in the year-ago quarter.
Segmental Update
The Mortgage segment reported a year-over-year decrease of 11.3% in total revenues to $246.6 million. Net premiums earned by the segment were $249.7 million, down 13% year over year. Claims paid were $10.4 million, down 74.4% year over year. The loss ratio was (18.6) against 19.6 in the year-ago quarter.
The homegenius segment’s revenues of $44.7 million climbed 89.4% year over year. Net premiums earned by the segment were $11.8 million, which surged 55.5% year over year. Adjusted pre-tax operating loss was $2.1 million, narrower than the prior-year quarter loss of $11.1 million.
Full-Year Highlights
Adjusted operating income of $3.16 per share beat the Zacks Consensus Estimate of $2.83. The bottom line increased 58% year over year. Total revenues came in at $1.3 billion, down 4.5% year over year.
New insurance written of $91.8 billion decreased 12.6% from 2020, the second-highest annual volume. The loss ratio was 1.9 against 44.2 in 2020 while the expense ratio was 25.3, a deterioration from 21 in 2020.
Financial Update
As of Dec 31, 2021, Radian Group had a solid cash balance of $152.6 million, up 62.1% from the 2020-end level. The debt-to-capital ratio deteriorated 20 bps to 24.9 from the 2020-end level.
Book value per share, a measure of net worth, climbed 8.6% year over year to $24.28 as of Dec 31, 2021. In 2021, the adjusted net operating return on equity was 14.2% compared with 8.2% in the year-ago quarter.
The risk-to-capital ratio of Radian Guaranty as of third-quarter end was 11.9:1, lower than 12.7:1 from the 2020-end level. Excess available resources to support PMIERs of $2.1 billion were 62% higher than Radian Guaranty's minimum required assets.
Share Repurchase and Dividend Update
Radian bought back 17.8 million shares worth $399.1 million in 2021. The board of directors paid a quarterly dividend of 14 cents per share.
The board approved a $400 million share buyback program and an increase of 43% in the quarterly dividend to 20 cents per share. The dividend will be paid out on Mar 3, 2022, to stockholders of record as of Feb 21, 2022
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Radian has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 #3 (Hold). We expect an in-line return from the stock in the next few months.