Financial Comparison: Radian Group (NYSE:RDN) vs. MetLife (NYSE:MET)

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

Risk & Volatility

Radian Group has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, MetLife has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500.

Insider and Institutional Ownership

95.3% of Radian Group shares are held by institutional investors. Comparatively, 95.0% of MetLife shares are held by institutional investors. 2.2% of Radian Group shares are held by company insiders. Comparatively, 0.4% of MetLife shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Radian Group pays an annual dividend of $1.02 per share and has a dividend yield of 3.0%. MetLife pays an annual dividend of $2.27 per share and has a dividend yield of 2.9%. Radian Group pays out 25.4% of its earnings in the form of a dividend. MetLife pays out 42.7% 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 and MetLife has raised its dividend for 12 consecutive years. Radian Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings for Radian Group and MetLife, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Radian Group	1	3	0	2	2.50
MetLife	0	3	8	1	2.83

Radian Group presently has a consensus target price of $38.00, indicating a potential upside of 10.42%. MetLife has a consensus target price of $94.60, indicating a potential upside of 21.18%. Given MetLife’s stronger consensus rating and higher possible upside, analysts plainly believe MetLife is more favorable than Radian Group.

Valuation and Earnings

This table compares Radian Group and MetLife”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	$1.29 billion	3.61	$604.44 million	$4.01	8.58
MetLife	$70.99 billion	0.72	$4.43 billion	$5.31	14.70

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Radian Group	45.90%	13.29%	6.93%
MetLife	5.30%	21.00%	0.85%

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 MetLife

MetLife, Inc., a financial services company, provides insurance, annuities, employee benefits, and asset management services worldwide. It operates through six segments: Retirement and Income Solutions; Group Benefits; Asia; Latin America; Europe, the Middle East and Africa; and MetLife Holdings. The company offers life, dental, group short-and long-term disability, individual disability, pet insurance, accidental death and dismemberment, vision, and accident and health coverages, as well as prepaid legal plans; administrative services-only arrangements to employers; and general and separate account, and synthetic guaranteed interest contracts, as well as private floating rate funding agreements. It also provides pension risk transfers, institutional income annuities, structured settlements, and capital markets investment products; and other products and services, such as life insurance products and funding agreements for funding postretirement benefits, as well as company, bank, or trust-owned life insurance used to finance nonqualified benefit programs for executives. In addition, it provides fixed, indexed-linked, and variable annuities; pension products; regular savings products; whole and term life, endowments, universal and variable life, and group life products; longevity reinsurance solutions; credit insurance products; and protection against long-term health care services. MetLife, Inc. was incorporated in 1999 and is based in New York, New York.