Radian Group’s 4Q Earnings Beat Estimates; Street Sees 29% Upside


Radian Group delivered better-than-expected earnings in the fourth quarter. The mortgage insurance provider saw a roughly 47% year-on-year increase in New Insurance Written (NIW) to $105 billion for fiscal 2020.

Meanwhile, shares of Radian Group (RDN) were up 2.3% at the end of trade on Wednesday. The company posted earnings per share (EPS) of $0.69 during the fourth quarter, which were ahead of analysts’ expectations of $0.64.

Net premiums earned in 4Q were $302.14 million, topping analysts’ estimates of $275.89 million..

For fiscal 2020, the company generated total revenue of $1.44 billion, down from the $1.53 billion posted in 2019. Diluted earnings per share came in at $2, versus $3.20 in the comparable year-ago period.

Radian group’s total primary mortgage insurance in force at the end of 4Q increased to $246.1 billion, from $245.5 billion at the end of the previous quarter.

Radian Group CEO Rick Thornberry said, “While our quarterly and full year results for 2020 were impacted by the pandemic environment, during the year we successfully increased book value per share by 11%, wrote record breaking levels of new mortgage insurance business and grew revenues in our real estate segment.”

The company did not provide any guidance. (See Radian Group stock analysis on TipRanks)

Recently, BTIG analyst Ryan Gilbert lowered Radian Group’s price target to $26 (22.1% upside potential) from $28 but reiterated a Buy rating.

Gilbert said, “2020 was tough for the company from a market share and loss ratio perspective.”  While he does not expect Radian Group to regain market share lost in 2020, he does expect an improvement in loss ratios by 4Q of fiscal 2021.

The rest of the Street has a Moderate Buy consensus rating on the stock, based on 2 Buys. The average analyst price target of $27.50 implies about 29% upside potential from current levels.

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