Why Radian Group (RDN) is Poised to Beat Earnings Estimates Again – Tale of the Tape

This company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. In fact, in these reports, RDN has beaten estimates by at least 25% in both cases, suggesting it has a nice short-term history of crushing expectations.

Earnings in Focus

Two quarters ago, RDN expected to earn 26 per share, while it actually produced earnings of 33 per share, a beat of 26.9%. Meanwhile, for the most recent quarter, the company looked to deliver earnings of 32 per share, when it actually saw earnings of 72 per share instead, representing a 125.0% positive surprise.

Thanks in part to this history, recent estimates have been moving higher for Radian Group. In fact, the Earnings ESP for RDN is positive, which is a great sign of a coming beat.

After all, the Zacks Earnings ESP compares the most accurate estimate to the broad consensus, looking to find stocks that have seen big revisions as of late, suggesting that analysts have recently become more bullish on the company’s earnings prospects. This is the case for RDN, as the firm currently has a Zacks Earnings ESP of 13.51%, so another beat could be around the corner.

This is particularly true when you consider that RDN has a great Zacks Rank #2 (Buy) which can be a harbinger of outperformance and a signal for a strong earnings profile. And when you add this solid Zacks Rank to a positive Earnings ESP, a positive earnings surprise happens nearly 70% of the time, so it seems pretty likely that RDN could see another beat at its next report, especially if recent trends are any guide.

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