Radian Group Inc.RDN is poised for long-term growth on the back of declining delinquency, lower level of paid claims and an improving risk-based capital ratio. The company has a favorable Growth Score of B. This style score analyzes the growth prospects of a company.
Being a mortgage insurer, the company was severely hit by the economic downturn. Nonetheless, it has gradually recovered due to high volume of quality and profitable business written after 2008. This has also created a foundation for solid future earnings.
Insurance in force should continue to grow driven by higher level of persistency and an increase in new mortgage insurance business. Radian has been focusing more on its core operations that have better growth prospects and ensure steady stream of earnings.
The company has also been pursuing strategic initiatives that should help it improve return on required capital, enhance financial flexibility and prudently manage the mortgage insurance business mix.
Radian has also been experiencing lower claims' payments over the last few years. Given strong credit characteristics of the new loans insured, we expect the momentum to last. Radian also remains focused on improving its mortgage insurance portfolio.
This provider of private mortgage insurance and related risk-management products and services carries an impressive VGM Score of A. Back-tested results show that stocks with a favorable Value Score of A or B coupled with a solid Zacks Rank #1 (Strong Buy) and 2 (Buy) offer the best investment opportunity.
Valuation looks attractive at current level as the price-to-book multiple of 1.04 is lower than the industry average of 1.2. The company has an impressive Value Score of A. Value Score helps to find undervalued stocks.
Shares of this Zacks Rank #2 insurer have lost 21.7% in a year compared with the industry 's 22.2% decrease.
The Zacks Consensus Estimate for 2019 earnings is pegged at $2.74, indicating 2.9% year-over-year increase. The company's expected long-term earnings growth is projected to be 5%. The company has a solid track of outperforming earnings expectations in the last six quarters.
Other Stocks to Consider
Investors interested in multiline insurers can look at Cigna Corporation CI , MGIC Investment Corporation MTG and MetLife, Inc. MET . Each of the stocks carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .
Cigna provides health services, such as medical, dental, behavioral health, pharmacy, vision, supplemental benefits, among others. The company delivered a 11.30% positive surprise in the last reported quarter.
MGIC Investment provides private mortgage insurance and ancillary services to lenders and government sponsored entities in the United States. The company delivered a 33.33% positive surprise in the last reported quarter.
MetLife engages in insurance, annuities, employee benefits, and asset management businesses. It came up with a 10.40% positive surprise in the last reported quarter.
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