Contrasting Travelers Companies (TRV) & Radian Group (RDN)

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

Profitability

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

Net Margins Return on Equity Return on Assets
Travelers Companies 8.56% 9.87% 2.28%
Radian Group 14.88% 12.99% 6.51%

Earnings and Valuation

This table compares Travelers Companies and Radian Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Travelers Companies $27.63 billion 1.37 $3.01 billion $8.61 16.01
Radian Group $1.24 billion 4.04 $308.25 million $0.78 29.73

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

Dividends

Travelers Companies pays an annual dividend of $2.88 per share and has a dividend yield of 2.1%. Radian Group pays an annual dividend of $0.01 per share and has a dividend yield of 0.0%. Travelers Companies pays out 33.4% 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. Travelers Companies has increased its dividend for 9 consecutive years. Travelers Companies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Travelers Companies has a beta of 1.25, indicating that its stock price is 25% 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.

Institutional and Insider Ownership

78.5% of Travelers Companies shares are held by institutional investors. Comparatively, 91.5% of Radian Group shares are held by institutional investors. 0.8% of Travelers Companies shares are held by insiders. Comparatively, 1.1% of Radian Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings for Travelers Companies and Radian Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Travelers Companies 2 6 6 0 2.29
Radian Group 0 2 8 0 2.80

Travelers Companies currently has a consensus target price of $133.11, suggesting a potential downside of 3.44%. Radian Group has a consensus target price of $23.88, suggesting a potential upside of 2.95%. Given Radian Group’s stronger consensus rating and higher probable upside, analysts clearly believe Radian Group is more favorable than Travelers Companies.

Summary

Radian Group beats Travelers Companies on 12 of the 17 factors compared between the two stocks.

About Travelers Companies

The Travelers Companies, Inc. is a holding company. The Company’s segments include Business and International Insurance; Bond & Specialty Insurance, and Personal Insurance. Through its subsidiaries, it provides commercial and personal property and casualty insurance products and services. The Business and International Insurance segment offers property and casualty insurance and insurance related services to its clients, in the United States and in Canada, as well as in the United Kingdom, the Republic of Ireland, Brazil and throughout other parts of the world. The Bond & Specialty Insurance segment provides surety, fidelity, management liability, professional liability, and other property and casualty coverages and related risk management services to a range of primarily domestic customers, utilizing various degrees of financially-based underwriting approaches. The Personal Insurance segment writes a range of property and casualty insurance covering individuals’ personal risks.

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.

Receive News & Ratings for Travelers Companies Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Travelers Companies and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply