Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- Radian Group (NYSE: RDN) has been reiterated by TheStreet Ratings as a sell with a ratings score of D. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity and feeble growth in its earnings per share.
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- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Thrifts & Mortgage Finance industry. The net income has significantly decreased by 45.9% when compared to the same quarter one year ago, falling from -$121.54 million to -$177.30 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness 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 trails that of both the industry average and the S&P 500.
- RADIAN GROUP INC's earnings per share declined by 45.6% in the most recent quarter compared to the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, RADIAN GROUP INC swung to a loss, reporting -$3.41 versus $2.25 in the prior year. This year, the market expects an improvement in earnings (-$0.22 versus -$3.41).
- The revenue fell significantly faster than the industry average of 4.2%. Since the same quarter one year prior, revenues fell by 38.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Compared to its closing price of one year ago, RDN's share price has jumped by 203.31%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in RDN do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
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