Yahoo Finance Radian (RDN) Down 0.5% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Radian (RDN). Shares have lost about 0.5% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Radian Group Q4 Earnings Top Estimates, Decrease Y/Y
Radian Group reported fourth-quarter 2022 adjusted operating income of $1.05 per share, which beat the Zacks Consensus Estimate by 20.6%. The bottom line decreased 1.8% year over year.
The results reflected higher monthly premium policy insurance in force, decline in single premium policy insurance in force, offset by higher expenses.
Quarter in Details
Operating revenues decreased 8.2% year over year to $307.9 million due to lower net premiums earned, services revenues and other income.
Net premiums earned were $232.8 million, down 10.9% year over year. Net investment income increased 58% year over year to $59 million.
MI New Insurance Written decreased 45.8% year over year to $12.8 billion.
Primary mortgage insurance in force was $261 billion as of Dec 31, 2022, up 6.1% year over year. The year-over-year change reflects a 10.0% increase in monthly premium policy insurance in force and a 12.6% decline in single premium policy insurance in force.
Persistency — the percentage of mortgage insurance in force that remains in the company’s books after a 12-month period — was 79.6% as of Dec 31, 2022, up 1530 basis points (bps) year over year.
Primary delinquent loans were 21,913 as of Dec 31, 2022, down 24.6% year over year.
Total expenses increased 21.3% year over year to $111.4 million on account of higher other operating expenses, interest expense and amortization of other acquired intangible assets.
The expense ratio was 27.3, a deterioration of 170 bps from the year-ago quarter.
Segmental Update
The Mortgage segment reported a year-over-year decrease of 2% in total revenues to $282.9 million. Net premiums earned by the segment were $229.9 million, down 7.9% year over year. Claims paid were $8.4 million, decreased 19.2% year over year. The loss ratio was (18.9) compared with (18.6) in the year-ago quarter.
The homegenius segment’s revenues of $18.6 million decreased 58.4% year over year. Net premiums earned by the segment were $2.9 million, which decreased 75.4% year over year. Adjusted pre-tax operating loss was $31.5 million, wider than the prior-year quarter loss of $2.1 million.
Full-Year Highlights
Adjusted operating income of $4.87 per share beat the Zacks Consensus Estimate of $4.71. The bottom line increased 54.6% year over year.
Total revenues came in at $1.3 billion, down 3.3% year over year.
New insurance written of $67.9 billion decreased 26% from 2021. The loss ratio was negative 35.5 against 1.9 in 2021 while the expense ratio was 26.7, a deterioration from 140 bps in 2021.
Financial Update
As of Dec 31, 2022, Radian Group had a solid cash balance of $56.2 million, down 62.8% from the 2021-end level. The debt-to-capital ratio deteriorated 160 bps to 26.5 from the 2021-end level.
Book value per share, a measure of net worth, climbed 2.7% year over year to $24.95 as of Dec 31, 2022.
In 2022, the adjusted net operating return on equity was 20.3%, expanded 630 basis points year over year.
The risk-to-capital ratio of Radian Guaranty as of fourth-quarter end was 10.7:1, lower than 11.1:1 from the 2021-end level. Excess available resources to support PMIERs of $5.6 billion were 45% higher than Radian Guaranty's minimum required assets.
Share Repurchase and Dividend Update
Radian bought back 19.5 million shares worth $400.2 million, including commissions in 2022. The board of directors paid a quarterly dividend of 20 cents per share. In January 2023, the board of directors approved a new share repurchase program that enables the company to repurchase its shares. The new authorization provides Radian Group the flexibility to repurchase shares opportunistically and spend up to $300 million, based on market and business conditions, stock price and other factors.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
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Radian Group Inc. (RDN) : Free Stock Analysis Report
