Radian Group Inc. Just Beat EPS By 9.4%: Here's What Analysts Think Will Happen Next

Last week, you might have seen that Radian Group Inc. (NYSE:RDN) released its quarterly result to the market. The early response was not positive, with shares down 5.6% to US$34.94 in the past week. The result was positive overall - although revenues of US$321m were in line with what the analysts predicted, Radian Group surprised by delivering a statutory profit of US$0.98 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Radian Group

Taking into account the latest results, Radian Group's five analysts currently expect revenues in 2024 to be US$1.27b, approximately in line with the last 12 months. Statutory earnings per share are expected to dip 8.0% to US$3.67 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.29b and earnings per share (EPS) of US$3.65 in 2024. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The analysts have also increased their price target 5.3% to US$35.21, clearly signalling that lower revenue forecasts next year are not expected to have a material impact on Radian Group's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Radian Group, with the most bullish analyst valuing it at US$40.00 and the most bearish at US$31.50 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2024 compared to the historical decline of 4.8% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 3.8% per year. So while a broad number of companies are forecast to grow, unfortunately Radian Group is expected to see its revenue affected worse than other companies in the industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Yet - earnings are more important to the intrinsic value of the business. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Radian Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Radian Group going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Radian Group (1 can't be ignored!) that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com