Financial Comparison: Loews (NYSE:L) & Radian Group (NYSE:RDN)

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

Insider and Institutional Ownership

95.3% of Radian Group shares are held by institutional investors. Comparatively, 58.3% of Loews shares are held by institutional investors. 2.2% of Radian Group shares are held by company insiders. Comparatively, 18.7% of Loews shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock 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 3.1%. Loews pays an annual dividend of $0.25 per share and has a dividend yield of 0.2%. Radian Group pays out 25.4% of its earnings in the form of a dividend. Loews pays out 3.1% 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. Radian Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Radian Group and Loews’ 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%
Loews	9.03%	8.86%	1.96%

Volatility and Risk

Radian Group has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500. Comparatively, Loews has a beta of 0.61, indicating that its share price is 39% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Radian Group and Loews, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Radian Group	1	3	3	0	2.29
Loews	0	0	0	1	4.00

Radian Group presently has a consensus target price of $40.20, suggesting a potential upside of 22.44%. Given Radian Group’s higher possible upside, equities research analysts clearly believe Radian Group is more favorable than Loews.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Radian Group	$1.29 billion	3.45	$604.44 million	$4.01	8.19
Loews	$18.45 billion	1.21	$1.67 billion	$7.98	13.62

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

Summary

Radian Group beats Loews on 10 of the 18 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 Loews

Loews Corporation provides commercial property and casualty insurance in the United States and internationally. The company offers specialty insurance products, such as management and professional liability, and other coverage products; surety and fidelity bonds; property insurance products that include standard and excess property, marine and boiler, and machinery coverages; and casualty insurance products, such as workers' compensation, general and product liability, and commercial auto, surplus, and umbrella coverages. It also provides loss-sensitive insurance programs; and warranty, risk management, information, and claims administration services. The company markets its insurance products and services through independent agents, brokers, and managing general underwriters. In addition, the company is involved in the transportation and storage of natural gas and natural gas liquids, and hydrocarbons through natural gas pipelines covering approximately 13,455 miles of interconnected pipelines; 855 miles of NGL pipelines in Louisiana and Texas; 14 underground storage fields with an aggregate gas capacity of approximately 199.5 billion cubic feet of natural gas; and eleven salt dome caverns and related brine infrastructure for providing brine supply services. Further, the company operates a chain of 25 hotels; and develops, manufactures, and markets a range of extrusion blow-molded and injection molded plastic containers for customers in the pharmaceutical, dairy, household chemicals, food/nutraceuticals, industrial/specialty chemicals, and water and beverage/juice industries, as well as manufactures commodity and differentiated plastic resins from recycled plastic materials. Loews Corporation was incorporated in 1969 and is headquartered in New York, New York.