NEW YORK (TheStreet) -- Shares of Radian Group Inc. (RAD) are higher by 3.07% to $16.78 at the start of trading on Tuesday, after the company announced it has entered into an agreement to sell its financial guaranty insurance subsidiary, Radian Asset Assurance Inc., to Assured Guaranty Corp. (AGO) for approximately $810 million.
"While Radian Asset has been an important part of our history and our success, we are committed to streamlining our business and aligning our strategy toward the mortgage and real estate markets," Radian CEO S.A. Ibrahim said.
"This agreement marks an important milestone as we prepare for finalization of the proposed PMIERs in 2015. While we expect to fully comply, the sale of Radian Asset will help to accelerate our ability to do so," Ibrahim added.
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The company expects the deal to close during the first half of 2015.
Separately, TheStreet Ratings team rates RADIAN GROUP INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate RADIAN GROUP INC (RDN) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and solid stock price performance. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 23.7%. Since the same quarter one year prior, revenues rose by 26.4%. 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.
- The gross profit margin for RADIAN GROUP INC is rather high; currently it is at 62.86%. It has increased significantly from the same period last year. Along with this, the net profit margin of 49.66% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 113.65% to $37.70 million when compared to the same quarter last year. In addition, RADIAN GROUP INC has also vastly surpassed the industry average cash flow growth rate of -9.65%.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: RDN Ratings Report