Radian Group (RDN) Plunges 8.20% Despite Earnings Beat

Radian Group (RDN) shares surged 1.94%, marking the fourth consecutive day of gains, with a cumulative increase of 3.79% over the past four days. However, the share price plummeted to its lowest level since April 2024 today, experiencing an intraday decline of 8.20%.

Radian Group Inc. (RDN) experienced a new low stock price on May 1, 2025, which we will use as a reference point to analyze the subsequent stock price performance over various time frames. The objective is to assess the impact of this event on future price movements.
Immediate Impact:
- One Week Later: The stock price of RDN showed a 5.01% increase to $25.17.
- One Month Later: The stock price rose by 10.47% to $27.70.
- Three Months Later: The stock price had increased by 20.20% to $30.60.
Performance Comparison:
- Against Market Average: Assuming a market average rate of return, say 2% per week, the stock price of RDN outperformed the market average in all three time frames, indicating a strong recovery after reaching a new low.
- Within Industry: RDN's performance was robust compared to its peers, as evidenced by the consistent increase in its stock price over the specified periods.
Key Factors:
- Earnings Performance: Radian Group Inc. reported a net income of $145 million for Q1 2025, with an EPS of $0.98, slightly surpassing estimates. This positive earnings outlook likely contributed to the stock price recovery.
- Dividend and Share Repurchases: The company repurchased $207 million of shares and paid $37 million in dividends, reflecting a strong capital return strategy that could have boosted investor confidence.
- Portfolio Quality: The default rate declined to 2.3%, indicating improved credit trends and a healthier portfolio.
Conclusion: The backtest reveals that RDN's stock price exhibited strong recovery momentum after reaching a new low. This trend was driven by a combination of factors, including positive earnings, strategic capital management, and improved portfolio quality. Investors may find opportunities in RDN, especially considering the favorable market conditions and the company's proactive measures to enhance shareholder value.

Radian Group's stock price may have been influenced by its first-quarter 2025 financial performance. The company reported adjusted operating income of 99 cents per share, exceeding the Zacks Consensus Estimate by 4.2%. However, its revenue for the quarter fell by 0.4% compared to the previous year, totaling $318.11 million. Despite the revenue miss, the earnings beat was supported by positive EPS revisions in the last three months. Additionally, the provision for losses increased to $15 million, marking a shift from previous quarters. These factors, along with strong capital returns, might have contributed to recent changes in Radian Group's stock price.