Financial Review: Radian Group (NYSE:RDN) and Lancashire (OTCMKTS:LCSHF)

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

Institutional & Insider Ownership

96.2% of Radian Group shares are owned by institutional investors. Comparatively, 63.3% of Lancashire shares are owned by institutional investors. 1.6% of Radian Group 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.

Dividends

Radian Group pays an annual dividend of $0.90 per share and has a dividend yield of 3.4%. Lancashire pays an annual dividend of $0.15 per share and has a dividend yield of 2.0%. Radian Group pays out 22.0% of its earnings in the form of a dividend. Lancashire pays out 14.6% 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 4 consecutive years. Radian Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for Radian Group and Lancashire, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Radian Group	1	4	2	0	2.14
Lancashire	1	1	0	0	1.50

Radian Group presently has a consensus target price of $25.67, indicating a potential downside of 3.65%. Given Radian Group’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Radian Group is more favorable than Lancashire.

Valuation & Earnings

This table compares Radian Group and Lancashire’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	$1.19 billion	3.52	$742.93 million	$4.10	6.50
Lancashire	N/A	N/A	N/A	$1.03	7.24

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Radian Group	54.83%	17.30%	9.65%
Lancashire	N/A	N/A	N/A

Summary

Radian Group beats Lancashire on 12 of the 14 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. The company operates through Mortgage and Homegenius segments. The Mortgage segment offers credit-related insurance coverage primarily through private mortgage insurance on residential first-lien mortgage loans, as well as other credit risk management, contract underwriting solutions. This segment primarily serves mortgage originators, such as mortgage banks, commercial banks, savings institutions, credit unions, and community banks. The Homegenius segment offers title services, including a suite of insurance and non-insurance title, tax and title data, centralized recording, document retrieval and default curative title services, and deed and property reports, as well as closing and settlement services comprising electronic execution and traditional signing services; real estate valuation products and services; and asset management services, as well as a suite of real estate technology products and services to facilitate real estate transactions, such as software as a service solutions. This segment serves consumers, mortgage lenders, mortgage and real estate investors, government-sponsored enterprises, and real estate brokers and agents. Radian Group Inc. was founded in 1977 and is headquartered in Wayne, Pennsylvania.

About Lancashire

Lancashire Holdings Limited, together with its subsidiaries, provides specialty insurance and reinsurance products in London, Bermuda, and Australia. The company operates through five segments: Property and Casualty Reinsurance, Property and Casualty Insurance, Aviation, Energy, and Marine. It offers property direct and facultative, property political risk and sovereign risk, and property terrorism and political violence insurance products, as well as property reinsurance services; and aviation AV52, aviation consortium, airline hull and liability, and satellite insurance products. The company also provides marine hull, total loss only, mortgagees interests insurance, mortgagees additional perils, excess protection and indemnity, marine war, and builder's risks; and energy insurance products covering upstream, downstream and onshore operational, and upstream construction all risks business. In addition, it offers general insurance, support, insurance agent, and insurance mediation services. Lancashire Holdings Limited was incorporated in 2005 and is headquartered in Hamilton, Bermuda.