A month has gone by since the last earnings report for Radian (RDN). Shares have lost about 5.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Radian due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

RDN Q4 Earnings Beat on Higher Premiums, Net Investment Income

Radian Group reported fourth-quarter 2024 adjusted operating income of $1.09 per share, which beat the Zacks Consensus Estimate by 14.7%. The bottom line increased 13.5% year over year.

The results reflected higher premium, improved investment income, higher revenues across both the Mortgage and All Other segments as well as lower higher expenses.

Quarter in Detail  

Operating revenues decreased 4% year over year to $316 million due to lower services revenues.

Net premiums earned were $238.5 million, which increased 2.5% year over year. Net investment income jumped 3.6% year over year to $71.3 million.

MI New Insurance Written increased 24% year over year to $13.2 billion.

Primary mortgage insurance in force increased 2% year over year to an all-time high of $275.1 billion as of Dec. 31, 2024.

Persistency — the percentage of mortgage insurance in force that remains in the company’s books after a 12-month period — was 84% as of Dec. 31, 2024, which remained unchanged year over year.

Primary delinquent loans were 24,055 as of Dec. 31, 2024, up 9.2% year over year. 

Total expenses decreased 14.8% year over year to $126.7 million on account of lower other operating expenses and interest expense.

The expense ratio was 24.2, which improved 130 bps from the year-ago quarter.

Segmental Update

The Mortgage segment’s total revenues of $288.7 million increased 2.1% year over year. Net premiums earned by the segment were $235.2 million, up 2.1% year over year. Claims paid were $5 million, which increased 66.7% year over year. The loss ratio was 0% compared with 2% in the year-ago quarter.

The All Other segment’s revenues of $33.9 million increased 3.8% year over year. Net premiums earned by the segment were $3.3 million, which increased 44.8% year over year. Adjusted pre-tax operating loss was $6.3 million, slightly wider than the prior-year quarter’s loss of $6 million.

Full-Year Highlights     

Adjusted operating income of $4.11 per share beat the Zacks Consensus Estimate by 2.7%. The bottom line increased 6% year over year.

Total revenues came in at $1.2 billion, up 4% year over year.

New insurance written of $51.9 billion declined 1.3% from 2023.

The loss ratio was negative 0.2 compared with negative 4.6 in 2023, while the expense ratio was 25.3, which improved from 70 bps in 2022.

Financial Update

As of Dec. 31, 2024, Radian Group had a solid cash balance of $38.8 million, which doubled from the 2023-end level. 

The debt-to-capital ratio improved 570 bps to 18.7 from the 2024-end level.
Book value per share, a measure of net worth, climbed 9.1% year over year to $31.33 as of Dec. 31, 2024.

In the fourth quarter, the adjusted net operating return on equity was 14.2%, which remains unchanged year over year.

As of Dec. 31, 2024, Radian Guaranty’s Available Assets under PMIERs totaled approximately $6 billion, resulting in PMIERs excess Available Assets of $2.2 billion.

Share Repurchase and Dividend Update

During the fourth quarter of 2024, Radian bought back 2.2 million shares worth $75 million. As of Dec. 31, 2024, purchase authority of up to $543 million remained available under the existing program. The board of directors paid a quarterly dividend of 24.5 cents per share in the fourth quarter of 2024.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

At this time, Radian has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Radian has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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Radian Group Inc. (RDN) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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