Radian Group (NYSE:RDN) and Principal Financial Group (NASDAQ:PFG) Financial Contrast

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

Dividends

Radian Group pays an annual dividend of $1.02 per share and has a dividend yield of 3.1%. Principal Financial Group pays an annual dividend of $3.16 per share and has a dividend yield of 3.4%. Radian Group pays out 25.4% of its earnings in the form of a dividend. Principal Financial Group pays out 46.0% 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 raised its dividend for 6 consecutive years and Principal Financial Group has raised its dividend for 2 consecutive years.

Volatility and Risk

Radian Group has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500. Comparatively, Principal Financial Group has a beta of 0.89, indicating that its share price is 11% less volatile than the S&P 500.

Earnings & Valuation

This table compares Radian Group and Principal Financial Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Radian Group	$1.28 billion	3.51	$604.44 million	$4.01	8.25
Principal Financial Group	$16.13 billion	1.27	$1.57 billion	$6.87	13.43

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

Profitability

This table compares Radian Group and Principal Financial Group’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%
Principal Financial Group	9.96%	16.02%	0.57%

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Radian Group	1	4	2	0	2.14
Principal Financial Group	0	0	1	0	3.00

Radian Group currently has a consensus target price of $40.00, indicating a potential upside of 20.92%. Given Radian Group’s higher possible upside, equities analysts plainly believe Radian Group is more favorable than Principal Financial Group.

Insider & Institutional Ownership

95.3% of Radian Group shares are owned by institutional investors. Comparatively, 75.1% of Principal Financial Group shares are owned by institutional investors. 2.2% of Radian Group shares are owned by insiders. Comparatively, 1.1% of Principal Financial Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Radian Group beats Principal Financial Group on 9 of the 17 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. 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 Principal Financial Group

Principal Financial Group, Inc. provides retirement, asset management, and insurance products and services to businesses, individuals, and institutional clients worldwide. The company operates through Retirement and Income Solutions, Principal Global Investors, Principal International, and U.S. Insurance Solutions segments. The Retirement and Income Solutions segment provides a portfolio of asset accumulation products and services for retirement savings and income. It offers products and services for defined contribution plans, including 401(k) and 403(b) plans, defined benefit pension plans, nonqualified executive benefit plans, employee stock ownership plans, equity compensation, and pension risk transfer services; individual retirement accounts; investment only products; and mutual funds, individual variable annuities, and bank products. The Principal Global Investors segment provides equity, fixed income, real estate, and other alternative investments, as well as asset allocation, stable value management, and other structured investment strategies. The Principal International segment offers pension accumulation products and services, mutual funds, asset management, income annuities, and life insurance accumulation products, as well as voluntary savings plans in Brazil, Chile, Mexico, China, Hong Kong Special Administrative Region, India, and Southeast Asia. The U.S. Insurance Solutions segment provides specialty benefits, such as group dental and vision insurance, group life insurance, and group and individual disability insurance, as well as administers group dental, disability, and vision benefits; and individual life insurance products comprising universal, variable universal, indexed universal, and term life insurance products in the United States. It also offers insurance solutions for small and medium-sized businesses and their owners, as well as executives. Principal Financial Group, Inc. was founded in 1879 and is based in Des Moines, Iowa.