Radian Group (RDN) and Allstate (ALL) Critical Contrast

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Radian Group and Allstate, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Radian Group 0 2 8 0 2.80
Allstate 1 7 4 0 2.25

Radian Group presently has a consensus price target of $23.53, suggesting a potential upside of 6.41%. Allstate has a consensus price target of $94.50, suggesting a potential downside of 9.32%. Given Radian Group’s stronger consensus rating and higher possible upside, equities analysts plainly believe Radian Group is more favorable than Allstate.

Dividends

Radian Group pays an annual dividend of $0.01 per share and has a dividend yield of 0.0%. Allstate pays an annual dividend of $1.48 per share and has a dividend yield of 1.4%. Radian Group pays out 1.3% of its earnings in the form of a dividend. Allstate pays out 20.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Radian Group has increased its dividend for 6 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Radian Group 14.88% 12.99% 6.51%
Allstate 7.32% 13.11% 2.32%

Valuation & Earnings

This table compares Radian Group and Allstate’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Radian Group $1.24 billion 3.85 $308.25 million $0.78 28.35
Allstate $36.53 billion 1.02 $1.88 billion $7.20 14.47

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

Institutional & Insider Ownership

91.4% of Radian Group shares are held by institutional investors. Comparatively, 76.5% of Allstate shares are held by institutional investors. 1.1% of Radian Group shares are held by company insiders. Comparatively, 1.6% of Allstate shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Radian Group has a beta of 1.54, meaning that its stock price is 54% more volatile than the S&P 500. Comparatively, Allstate has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500.

Summary

Radian Group beats Allstate on 10 of the 17 factors compared between the two stocks.

Radian Group Company Profile

Radian Group Inc. is an insurance holding company that provides mortgage insurance, and products and services to the real estate and mortgage finance industries. The Company operates in two segments: Mortgage Insurance and Services. The Mortgage Insurance segment provides credit-related insurance coverage, principally through private mortgage insurance to mortgage lending institutions. The Services segment provides outsourced services, information-based analytics valuations and specialty consulting and surveillance services for buyers and sellers of, and investors in, mortgage- and real estate-related loans and securities, as well as other asset-backed securities (ABS). It also offers mortgage insurance products, such as primary mortgage insurance and pool insurance. Its Services segment is engaged in offering businesses, such as loan review and due diligence, and surveillance, including residential mortgage-backed securities (RMBS) surveillance and loan servicer oversight.

Allstate Company Profile

The Allstate Corporation (Allstate) is a holding company for Allstate Insurance Company. The Company’s business is conducted principally through Allstate Insurance Company, Allstate Life Insurance Company and other subsidiaries. It is engaged in the property-liability insurance business and the life insurance, retirement and investment products business. Its segments include Allstate Protection, Allstate Financial, Discontinued Lines and Coverages, and Corporate and Other. The Allstate Protection segment sells private passenger auto, homeowners, and other property-liability insurance products through agencies and directly through contact centers and the Internet. The Allstate Financial segment sells life insurance and voluntary accident and health insurance products. The Corporate and Other segment consists of holding company activities and certain non-insurance operations. Its Discontinued Lines and Coverages segment includes results from property-liability insurance coverage.

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