We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Radian (RDN) Gains 21% YTD: Will It Retain the Bull Run?
Read MoreHide Full Article
Shares of Radian Group Inc. (RDN - Free Report) have rallied 20.8% year to date, outperforming the industry’s growth of 12.7%, the Finance sector’s rise of 10.4% and the Zacks S&P 500 composite’s increase of 16.8%. With a market capitalization of $5.2 billion, the average volume of shares traded in the last three months was 0.9 million.
Improving mortgage insurance portfolio, declining claims, a well-performing homegenius segment, a solid capital position and effective capital deployment drive this Zacks Rank #2 (Buy) mortgage insurer.
RDN has a solid earnings surprise history. It surpassed estimates in each of the last four quarters, the average earnings surprise being 21.30%. Earnings of RDN have risen 8.5% over the last five years.
Return on invested capital in the trailing 12 months was 8.2%, better than the industry average of 2.4%, reflecting RDN’s efficiency in utilizing funds to generate income.
Image Source: Zacks Investment Research
Can the Stock Retain the Momentum?
New business, combined with increasing annual persistency, should drive continued growth of the insurance-in-force portfolio. Radian’s mortgage insurance portfolio creates a strong foundation for future earnings.
Also, given an increase in market mortgage interest rates, the company expects a continued positive impact on persistency rates.
Based on projections of private mortgage insurance penetration in the overall insurable mortgage market, Radian expects the private mortgage insurance market to be worth between $300 billion and $350 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.
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.
Capital contribution, reinsurance transaction and cash position support a solid capital position. This, in turn, aids the insurer to engage in wealth distribution via dividend hikes and share buybacks. RDN has increased the quarterly dividend with a total increase of 96% over the past four years. It also has $667 million remaining under its buyback authorization.
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 6.5% and 1.7% north, respectively, in the past 30 days, reflecting analyst optimism. The long-term earnings growth rate is expected to be 5%.
CNO Financial earnings surpassed estimates in three of the last four quarters and missed in one, the average beat being 21.21%. Year to date, CNO has rallied 16.5%.
The Zacks Consensus Estimate for CNO’s 2024 and 2025 earnings implies 11% and 6.2% year-over-year growth, respectively.
MGIC Investment earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 15.59%. Year to date, MTG stock has surged 23.8%.
The Zacks Consensus Estimate for MTG’s 2024 and 2025 earnings indicates 6.7% and 0.7% year-over-year growth, respectively.
Kemper earnings surpassed estimates in two of the last four quarters, missed in one and met estimates in one, the average earnings surprise being 6.93%. Year to date, MTG stock has surged 26.6%
The Zacks Consensus Estimate for KMPR’s 2024 and 2025 earnings suggests 796.6% and 14.6% year-over-year growth, respectively.
See More Zacks Research for These Tickers
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Radian (RDN) Gains 21% YTD: Will It Retain the Bull Run?
Shares of Radian Group Inc. (RDN - Free Report) have rallied 20.8% year to date, outperforming the industry’s growth of 12.7%, the Finance sector’s rise of 10.4% and the Zacks S&P 500 composite’s increase of 16.8%. With a market capitalization of $5.2 billion, the average volume of shares traded in the last three months was 0.9 million.
Improving mortgage insurance portfolio, declining claims, a well-performing homegenius segment, a solid capital position and effective capital deployment drive this Zacks Rank #2 (Buy) mortgage insurer.
RDN has a solid earnings surprise history. It surpassed estimates in each of the last four quarters, the average earnings surprise being 21.30%. Earnings of RDN have risen 8.5% over the last five years.
Return on invested capital in the trailing 12 months was 8.2%, better than the industry average of 2.4%, reflecting RDN’s efficiency in utilizing funds to generate income.
Image Source: Zacks Investment Research
Can the Stock Retain the Momentum?
New business, combined with increasing annual persistency, should drive continued growth of the insurance-in-force portfolio. Radian’s mortgage insurance portfolio creates a strong foundation for future earnings.
Also, given an increase in market mortgage interest rates, the company expects a continued positive impact on persistency rates.
Based on projections of private mortgage insurance penetration in the overall insurable mortgage market, Radian expects the private mortgage insurance market to be worth between $300 billion and $350 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.
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.
Capital contribution, reinsurance transaction and cash position support a solid capital position. This, in turn, aids the insurer to engage in wealth distribution via dividend hikes and share buybacks. RDN has increased the quarterly dividend with a total increase of 96% over the past four years. It also has $667 million remaining under its buyback authorization.
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 6.5% and 1.7% north, respectively, in the past 30 days, reflecting analyst optimism. The long-term earnings growth rate is expected to be 5%.
Other Stocks to Consider
Other players in the insurance industry are CNO Financial Group (CNO - Free Report) , MGIC Investment (MTG - Free Report) and Kemper Corporation (KMPR - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CNO Financial earnings surpassed estimates in three of the last four quarters and missed in one, the average beat being 21.21%. Year to date, CNO has rallied 16.5%.
The Zacks Consensus Estimate for CNO’s 2024 and 2025 earnings implies 11% and 6.2% year-over-year growth, respectively.
MGIC Investment earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 15.59%. Year to date, MTG stock has surged 23.8%.
The Zacks Consensus Estimate for MTG’s 2024 and 2025 earnings indicates 6.7% and 0.7% year-over-year growth, respectively.
Kemper earnings surpassed estimates in two of the last four quarters, missed in one and met estimates in one, the average earnings surprise being 6.93%. Year to date, MTG stock has surged 26.6%
The Zacks Consensus Estimate for KMPR’s 2024 and 2025 earnings suggests 796.6% and 14.6% year-over-year growth, respectively.