Radian Group Inc (RDN) stock analysis

P/E above its 5-year median

Radian's P/E of 9.1 is above its own 5-year median of 8.0.

P/E below the industry

Radian's P/E of 9.1 is below the Insurance Carriers median of 11.2.

P/S below the industry

Radian's price-to-sales of 2.51 is below the Insurance Carriers median of 2.96.

P/B below the industry

Radian's price-to-book of 1.06 is below the Insurance Carriers median of 1.57.

Trading below fair value

The share price of $37.24 is below our fair value estimate of $42.23.

Margin of safety under 20%

The price is 11.8% below fair value, less than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 0.2% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -1.6% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -3.1% over the last twelve months, against a 5-year average of 8.2% a year.

Growing faster than the industry

Revenue grew 65.3% over the last twelve months; the Insurance Carriers median is 11.1%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin trend

Banks and insurers do not report gross profit.

Return on equity under 15%

Return on equity was 12.0% over the last twelve months and averaged 14.5% over five years; we look for 15% on both.

Return on assets over 1%

Return on assets was 6.0%; for a bank or insurer, 1% or more is considered good.

Return on equity below the industry

Radian's return on equity of 12.0% is below the Insurance Carriers median of 14.0%.

Earnings grew over 5 years

Net income grew 8.2% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 28.4% over the last twelve months, against a 5-year average of 51.5%.

Net margin above the industry

Radian's net margin of 28.4% is above the Insurance Carriers median of 10.6%.

Low debt

Debt is 11.8% of shareholders' equity, under the 40% we consider low.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 258% of total debt.

Interest coverage

Interest expense is not reported separately.

Short-term liquidity

Insurers do not split assets into current and non-current.

Bankruptcy risk (Altman Z)

The Altman model does not apply to insurers.

Pays a dividend

Radian paid dividends worth 2.7% of the share price over the last twelve months.

Yield below Treasuries

The 2.7% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Radian yields 2.7%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 7 fiscal years.

Covered by earnings

Dividends take 25.3% of net income.

Covered by free cash flow

Dividends take 10.0% of free cash flow.