Radian Group (RDN) and MGIC Investment (MTG) Critical Comparison

Radian Group (NYSE: RDN) and MGIC Investment (NYSE:MTG) are both mid-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, dividends, risk, valuation, analyst recommendations and institutional ownership.

Analyst Ratings

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This is a summary of recent ratings and recommmendations for Radian Group and MGIC Investment, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Radian Group 0 4 7 0 2.64
MGIC Investment 0 3 10 0 2.77

Radian Group presently has a consensus target price of $23.81, suggesting a potential upside of 46.23%. MGIC Investment has a consensus target price of $15.94, suggesting a potential upside of 47.43%. Given MGIC Investment’s stronger consensus rating and higher probable upside, analysts clearly believe MGIC Investment is more favorable than Radian Group.

Dividends

Radian Group pays an annual dividend of $0.01 per share and has a dividend yield of 0.1%. MGIC Investment does not pay a dividend. Radian Group pays out 0.5% of its earnings in the form of a dividend.

Profitability

This table compares Radian Group and MGIC Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Radian Group 12.99% 14.94% 7.58%
MGIC Investment 38.25% 17.43% 9.69%

Valuation and Earnings

This table compares Radian Group and MGIC Investment’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Radian Group $1.22 billion 2.86 $121.08 million $1.82 8.95
MGIC Investment $1.07 billion 3.77 $355.76 million $1.36 7.95

MGIC Investment has lower revenue, but higher earnings than Radian Group. MGIC Investment is trading at a lower price-to-earnings ratio than Radian Group, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

95.0% of Radian Group shares are held by institutional investors. Comparatively, 92.7% of MGIC Investment shares are held by institutional investors. 1.0% of Radian Group shares are held by insiders. Comparatively, 1.0% of MGIC Investment shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Radian Group has a beta of 1.54, meaning that its share price is 54% more volatile than the S&P 500. Comparatively, MGIC Investment has a beta of 1.98, meaning that its share price is 98% more volatile than the S&P 500.

Summary

MGIC Investment beats Radian Group on 11 of the 16 factors compared between the two stocks.

Radian Group Company Profile

Radian Group Inc., through its subsidiaries, provides mortgage and real estate products and services in the United States. It operates through two segments, Mortgage Insurance and Services. The Mortgage Insurance segment offers credit-related insurance coverage, primarily through private mortgage insurance, as well as other credit risk management solutions to mortgage lending institutions; and primary mortgage insurance coverage on residential first-lien mortgage loans. 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, servicer and loan surveillance, and underwriting; and real estate services comprising real estate owned asset management, review and valuation services related to single family rental properties, real estate valuation services, and real estate brokerage services, as well as title and settlement services that include title search, settlement, and closing services. This segment provides its mortgage and real estate services to mortgage lenders, financial institutions, mortgage and real estate investors, government entities, and others. The company was founded in 1977 and is headquartered in Philadelphia, Pennsylvania.

MGIC Investment Company Profile

MGIC Investment Corporation, through its subsidiaries, provides private mortgage insurance and ancillary services to lenders and government sponsored entities in the United States. The company offers primary mortgage insurance that provides mortgage default protection on individual loans, as well as covers unpaid loan principal, delinquent interest, and various expenses associated with the default and subsequent foreclosure. It also provides contract underwriting services; and other services for the mortgage finance industry, such as analysis of loan originations and portfolios, and mortgage lead generation services, as well as reinsurance arrangements. The company serves originators of residential mortgage loans, including savings institutions, commercial banks, mortgage brokers, credit unions, mortgage bankers, and other lenders. MGIC Investment Corporation was founded in 1957 and is headquartered in Milwaukee, Wisconsin.

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