Radian Q3 Earnings: Buying Soaring NYSE:RDN Stock Before Call?

in EARNINGS/INVESTING IDEAS by

Radian Group Inc. (NYSE:RDN) is scheduled to report Q3 earnings results after markets close for trading on November 4, 2020.

The company is expected to report earnings of $0.46/share on revenue of $327.8 million. The consensus earnings per share (EPS) of $0.46/share is based on a poll of 8 analysts and represents a decline in eps of −42.9% over the same quarter last year, when the company reported earnings of $0.81/share.

The revenue forecast of $327.8 million based on a poll of 4 analysts implies a year-over-year (YoY) decline in revenue of −13.8%. Last year the company reported $380.3 million in revenue for the quarter.

Expected to report EPS contraction of −42.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $327.85 $380.34 −13.8%
EPS $0.46 $0.81 −42.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from Radian Group Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.28 -$0.36 −227.4% Missed
Q1, 2020 $0.76 $0.80 5.3% Beat
Q4, 2019 $0.77 $0.86 11.8% Beat
Q3, 2019 $0.74 $0.81 9.6% Beat
Q2, 2019 $0.72 $0.80 11.5% Beat
Q1, 2019 $0.67 $0.73 8.3% Beat
Q4, 2018 $0.66 $0.70 6.0% Beat
Q3, 2018 $0.63 $0.71 13.1% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 2.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 7, 2020 $15.20 $15.64 2.9% Increase
May 6, 2020 $14.02 $15.26 8.8% Increase
February 5, 2020 $25.15 $24.87 −1.1% Decline
October 30, 2019 $24.84 $25.10 1.0% Increase

Fundamentals And Technical Analysis

Radian Group Inc. is currently trading at $17.15/share, down −3.9% for the day. The company is trading at approximately 65.2% of its 52-week high of $26.32/share. The company’s stock price is up 9.7% since the last earnings report and down −1.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 56.42 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:RDN Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 7.38 and a forward P/E multiple of 12.06.

Radian Group Inc.’s current share price also implies a price-to-book (P/B) multiple of 0.82. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $17.15
P/E Ratio 7.4x
P/E Ratio (Fwd) 12.1x
PEG Ratio −0.3
Total Debt / Total Capital 32.3%
Levered Free Cash Flow $638.6 million
EV / EBITDA −0.5x

Finbox

Radian Group Inc. is a mid-cap stock with a market capitalization of $3.419 billion and a total enterprise value of $4.985 billion. The company operates in the Financials sector and the Thrifts & Mortgage Finance industry.

Radian Group Inc., together with its subsidiaries, engages in the mortgage and real estate services business in the United States. The company operates in two segments, Mortgage Insurance and Services. The Mortgage Insurance segment offers credit-related insurance coverage, primarily through private mortgage insurance on residential first-lien mortgage loans, as well as other credit risk management solutions to mortgage lending institutions and mortgage credit investors. This segment primarily serves mortgage bankers, commercial banks, savings institutions, credit unions, and community banks. The Services segment offers mortgage services, including transaction management services, such as loan review, residential mortgage-backed securities securitization and distressed asset reviews, review and valuation services related to single family rental properties, servicer and loan surveillance, and underwriting; real estate services comprising real estate owned asset management, and real estate valuation and brokerage services, as well as software as a service solutions and platforms; and title services that include title insurance products, and closing services. This segment provides its mortgage and real estate services to mortgage lenders, financial institutions, investors, government entities, and others. The company was founded in 1977 and is headquartered in Philadelphia, Pennsylvania.

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