NEW YORK (
-- Radian Group
) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year.
Highlights from the ratings report include:
- RDN's very impressive revenue growth greatly exceeded the industry average of 24.7%. Since the same quarter one year prior, revenues leaped by 894.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Thrifts & Mortgage Finance industry and the overall market, RADIAN GROUP INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- RADIAN GROUP INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, RADIAN GROUP INC turned its bottom line around by earning $2.25 versus -$15.79 in the prior year. For the next year, the market is expecting a contraction of 160.0% in earnings (-$1.35 versus $2.25).
- RDN's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 45.11%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
Radian Group Inc., through its subsidiaries, provides credit-related insurance coverage and financial services in the United States and internationally. The company operates in two segments, Mortgage Insurance and Financial Guaranty. Radian Group has a market cap of $392.9 million and is part of the
industry. Shares are up 60.7% year to date as of the close of trading on Friday.
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-- Written by a member of TheStreet RatingsStaff