Head-To-Head Analysis: Radian Group (NYSE:RDN) and PayPal (NASDAQ:PYPL)

Radian Group (NYSE:RDN) and PayPal (NASDAQ:PYPL) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, dividends, profitability, risk and earnings.

Dividends

Radian Group pays an annual dividend of $1.02 per share and has a dividend yield of 3.0%. PayPal pays an annual dividend of $0.56 per share and has a dividend yield of 1.0%. Radian Group pays out 26.2% of its earnings in the form of a dividend. PayPal pays out 10.6% 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 raised its dividend for 6 consecutive years. Radian Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Radian Group and PayPal”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Radian Group	$1.20 billion	3.77	$582.64 million	$3.89	8.77
PayPal	$33.17 billion	1.41	$5.23 billion	$5.29	10.32

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

Analyst Recommendations

This is a summary of current recommendations for Radian Group and PayPal, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Radian Group	0	3	6	0	2.67
PayPal	4	34	9	0	2.11

Radian Group presently has a consensus price target of $43.14, indicating a potential upside of 26.45%. PayPal has a consensus price target of $56.31, indicating a potential upside of 3.10%. Given Radian Group’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Radian Group is more favorable than PayPal.

Insider and Institutional Ownership

95.3% of Radian Group shares are owned by institutional investors. Comparatively, 68.3% of PayPal shares are owned by institutional investors. 2.0% of Radian Group shares are owned by insiders. Comparatively, 0.6% of PayPal shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Radian Group	32.60%	13.65%	6.91%
PayPal	14.36%	24.39%	6.06%

Volatility & Risk

Radian Group has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500. Comparatively, PayPal has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500.

Summary

Radian Group beats PayPal on 9 of the 17 factors compared between the two stocks.

About Radian Group

Radian Group Inc., together with its subsidiaries, engages in the mortgage and real estate services business in the United States. It operates through two segments, Mortgage Insurance and Homegenius segments. The Mortgage Insurance segment aggregates, manages, and distributes U.S. mortgage credit risk for mortgage lending institutions and mortgage credit investors, through private mortgage insurance on residential first-lien mortgage loans; and other credit risk management solutions, including contract underwriting. The Homegenius segment offers title services, including a suite of insurance and non-insurance titles; tax and title data, centralized recording, document retrieval, and default curative title services; deed and property reports; closing and settlement services; mortgage underwriting and processing; escrow; appraisal management; and real estate brokerage. This segment also provides real estate valuation products and services; asset management services for managing real estate owned properties, which includes a web-based workflow solution; and a suite of real estate technology products and services to facilitate real estate transactions, such as proprietary platforms as a service solution. It serves mortgage originators, such as mortgage bankers, commercial banks, savings institutions, credit unions, and community banks; and consumers, mortgage lenders, mortgage and real estate investors, government-sponsored enterprises, real estate brokers and agents, and corporations for their employees. The company was formerly known as CMAC Investment Corp. and changed its name to Radian Group Inc. in June 1999. Radian Group Inc. was founded in 1977 and is headquartered in Wayne, Pennsylvania.

About PayPal

PayPal Holdings, Inc. operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. It operates a two-sided network at scale that connects merchants and consumers that enables its customers to connect, transact, and send and receive payments through online and in person, as well as transfer and withdraw funds using various funding sources, such as bank accounts, PayPal or Venmo account balance, PayPal and Venmo branded credit products comprising its installment products, credit and debit cards, and cryptocurrencies, as well as other stored value products, including gift cards and eligible rewards. The company provides payment solutions under the PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy names. The company was founded in 1998 and is headquartered in San Jose, California.