Assured Guaranty (NYSE: AGO) and Radian Group (NYSE:RDN) are both mid-cap financials companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, risk, earnings and analyst recommendations.
Institutional & Insider Ownership
95.8% of Assured Guaranty shares are owned by institutional investors. Comparatively, 91.5% of Radian Group shares are owned by institutional investors. 2.6% of Assured Guaranty shares are owned by company insiders. Comparatively, 1.1% of Radian Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This table compares Assured Guaranty and Radian Group’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Assured Guaranty||$1.68 billion||2.42||$881.00 million||$6.96||4.97|
|Radian Group||$1.24 billion||4.04||$308.25 million||$0.78||29.73|
Assured Guaranty has higher revenue and earnings than Radian Group. Assured Guaranty is trading at a lower price-to-earnings ratio than Radian Group, indicating that it is currently the more affordable of the two stocks.
Assured Guaranty pays an annual dividend of $0.57 per share and has a dividend yield of 1.6%. Radian Group pays an annual dividend of $0.01 per share and has a dividend yield of 0.0%. Assured Guaranty pays out 8.2% of its earnings in the form of a dividend. Radian Group pays out 1.3% 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. Assured Guaranty has raised its dividend for 6 consecutive years. Assured Guaranty is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Assured Guaranty has a beta of 1.64, indicating that its stock price is 64% more volatile than the S&P 500. Comparatively, Radian Group has a beta of 1.57, indicating that its stock price is 57% more volatile than the S&P 500.
This is a summary of current ratings for Assured Guaranty and Radian Group, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Assured Guaranty presently has a consensus target price of $48.00, indicating a potential upside of 38.73%. Radian Group has a consensus target price of $23.88, indicating a potential upside of 2.95%. Given Assured Guaranty’s stronger consensus rating and higher possible upside, equities analysts plainly believe Assured Guaranty is more favorable than Radian Group.
This table compares Assured Guaranty and Radian Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Assured Guaranty beats Radian Group on 11 of the 17 factors compared between the two stocks.
About Assured Guaranty
Assured Guaranty Ltd. is a holding company. The Company, through its subsidiaries, provides credit protection products to the United States and international public finance, including infrastructure, and structured finance markets. It applies its credit underwriting judgment, risk management skills and capital markets experience primarily to offer financial guaranty insurance that protects holders of debt instruments and other monetary obligations from defaults in scheduled payments. It markets its financial guaranty insurance directly to issuers and underwriters of public finance and structured finance securities, as well as to investors in such obligations. It guarantees obligations issued principally in the United States and the United Kingdom and also guarantees obligations issued in other countries and regions, including Australia and Western Europe. It also provides other forms of insurance that are in line with its risk profile and benefit from its underwriting experience.
About Radian Group
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.
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