Radian Group Earnings: An Early Look

Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.

Let's turn to Radian Group (NYSE: RDN  ) . The mortgage-insurance company has been on fire lately as an improving housing market has greatly bolstered the industry's prospects going forward. Let's take an early look at what's been happening with Radian Group over the past quarter and what we're likely to see in its quarterly report next Monday.

Stats on Radian Group

Analyst EPS Estimate

($0.50)

Year-Ago EPS

($0.92)

Revenue Estimate

$200 million

Change From Year-Ago Revenue

8.5%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Will Radian Group insure shareholder happiness?
During the past three months, analysts have gotten increasingly optimistic about Radian's future. They still see the company losing money throughout 2013, but they see the company becoming profitable as early as the second quarter and have greatly reduced their loss estimates. The shares have definitely responded well to their positive views, rising more than 50% since early November.

Radian suffered a double-whammy during the financial crisis, as both of its primary businesses got hammered. As an insurer of municipal bonds, the company faced huge potential liability as several municipalities weighed bankruptcy as an option. More importantly, the mortgage-insurance industry took an even bigger hit, with Ambac Financial having to declare bankruptcy and peers MGIC Investment (NYSE: MTG  ) and Genworth Financial (NYSE: GNW  ) both having to retrench dramatically in order to survive the crisis.

Since then, Radian has sold off its muni-bond insurance business, as rival Assured Guaranty (NYSE: AGO  ) bought the unit in early 2012. But Radian has been working hard to get its mortgage-insurance business into better shape. During 2012, the company cut its delinquent inventory by 16%, with its new insurance volume more than doubling from 2011's levels as the company continued its multiyear recovery.

The biggest recent news for Radian came late in the quarter, when Freddie Mac joined Fannie Mae in extending approval of Radian's mortgage-insurance unit as eligible to insure mortgages for the rest of 2013. That should help the company stay on track to write new business, and as long as the housing market stays healthy, Radian has the potential for continued growth.

In its quarterly report, Radian needs to demonstrate that it's capitalizing on the opportunity that the housing rebound has provided. Given the huge boost in Radian's shares already, anything short of a strong showing could leave investors feeling disappointed with the mortgage insurer's results.

Find the best stocks out there
Radian has been a great speculative buy for traders lately, but the best investing approach is to choose great companies and stick with them for the long term. In our free report "
3 Stocks That Will Help You Retire Rich," we name stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Click here to add Radian Group to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2242689, ~/Articles/ArticleHandler.aspx, 10/21/2014 1:48:12 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement