Head to Head Comparison: Radian Group (NYSE:RDN) and PayPal (NASDAQ:PYPL)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PayPal	13.78%	24.39%	5.97%
Radian Group	28.41%	14.28%	6.99%

Dividends

PayPal pays an annual dividend of $0.56 per share and has a dividend yield of 1.0%. Radian Group pays an annual dividend of $1.02 per share and has a dividend yield of 2.8%. PayPal pays out 10.7% of its earnings in the form of a dividend. Radian Group pays out 25.0% 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. Radian Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PayPal	$33.17 billion	1.47	$5.23 billion	$5.24	11.22
Radian Group	$1.20 billion	4.06	$582.64 million	$4.08	9.00

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.

Risk and Volatility

PayPal has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500. Comparatively, Radian Group has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500.

Institutional and Insider Ownership

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

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PayPal	6	32	8	0	2.04
Radian Group	0	3	6	0	2.67

PayPal presently has a consensus target price of $55.94, suggesting a potential downside of 4.83%. Radian Group has a consensus target price of $42.57, suggesting a potential upside of 15.89%. Given Radian Group’s stronger consensus rating and higher possible upside, analysts clearly believe Radian Group is more favorable than PayPal.

Summary

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

About PayPal

PayPal Holdings, Inc. operates a global digital payments platform that helps consumers and businesses send and receive payments online and in person. Its services include PayPal checkout and digital wallets, Venmo peer-to-peer payments, Braintree payment processing for merchants, and Xoom international money transfers. The company traces its roots to Confinity, founded in 1998, and the online payments business that developed through its merger with X.com. PayPal became part of eBay in 2002 and was spun off as an independent public company in 2015.

About Radian Group

Radian Group Inc. is a mortgage and real estate services company whose primary business is private mortgage insurance. Through its subsidiaries, it provides mortgage insurance to lenders and other housing finance participants in the United States. Mortgage insurance helps protect lenders and investors against losses if borrowers default. It can also support home purchases by allowing qualified borrowers to obtain mortgages with smaller down payments than would otherwise be required. Radian also offers services and solutions related to mortgage risk management.