On Jan 8, shares of Radian Group Inc. RDN touched a 52-week low of $11.88. In just five trading sessions of 2016, the company lost 10.8% of its share value. Over the past one year, share price declined by a significant 24%. Its peers fared relatively better. MGIC Investment Corp. MTG declined 9% while Old Republic International Corporation ORI gained 34% during the same time frame.
Investors have been disappointed by the insurer’s earnings performance. In the last quarter, the company missed the Zacks Consensus Estimate and declined year over year due to a higher expense level. With respect to the surprise trend, Radian Group posted negative surprises in two of last four quarters, with an average negative surprise of 4.81%.
Radian Group bore the brunt of an increase in mortgage interest rates, which impacted home sales. Growing competition in the private mortgage insurance industry resulted in a decrease in Radian Group’s market share. These continue to weigh on the operational results of the insurer.
Additionally, reduction of the annual premium of the Federal Housing Administration and new stricter regulations continue to pose as headwinds for the company.
Though the company recently announced that it is in compliance with the capital rules as per the Private Mortgage Insurer Eligibility Requirements (PMIERs), the news failed to cheer its investors. Also, the company’s numerous measures taken to diversify revenue sources and heighten focus on the core business failed to appease its investors.
Radian Group presently carries a Zacks Rank #4 (Sell). A better-ranked multiline insurers is Loews Corp. L, with a Zacks Rank #2 (Buy).
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