Radian Group (NYSE:RDN) and BB Seguridade Participacoes (OTCMKTS:BBSEY) Critical Review

BB Seguridade Participacoes (OTCMKTS:BBSEY) and Radian Group (NYSE:RDN) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, profitability and risk.

Insider and Institutional Ownership

0.0% of BB Seguridade Participacoes shares are owned by institutional investors. Comparatively, 95.3% of Radian Group shares are owned by institutional investors. 2.0% of Radian Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility and Risk

BB Seguridade Participacoes has a beta of 0.39, indicating that its stock price is 61% less volatile than the S&P 500. Comparatively, Radian Group has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BB Seguridade Participacoes	$1.85 billion	8.41	$1.61 billion	$0.90	8.91
Radian Group	$1.20 billion	3.95	$582.64 million	$3.89	9.19

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

Analyst Recommendations

This is a summary of recent ratings for BB Seguridade Participacoes and Radian Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BB Seguridade Participacoes	1	3	0	0	1.75
Radian Group	0	3	6	0	2.67

Radian Group has a consensus target price of $43.14, indicating a potential upside of 20.69%. Given Radian Group’s stronger consensus rating and higher possible upside, analysts clearly believe Radian Group is more favorable than BB Seguridade Participacoes.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
BB Seguridade Participacoes	87.94%	79.22%	43.59%
Radian Group	32.60%	13.65%	6.91%

Dividends

BB Seguridade Participacoes pays an annual dividend of $0.66 per share and has a dividend yield of 8.2%. Radian Group pays an annual dividend of $1.02 per share and has a dividend yield of 2.9%. BB Seguridade Participacoes pays out 73.3% of its earnings in the form of a dividend. Radian Group pays out 26.2% 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.

Summary

Radian Group beats BB Seguridade Participacoes on 10 of the 17 factors compared between the two stocks.

About BB Seguridade Participacoes

BB Seguridade Participações S.A., through its subsidiaries operates in the insurance, pension plans, and bonds, businesses in Brazil. The company operates through Security and Brokerage segments. The Security segment offers life, property, rural, special risks and financial, transport, hulls, and housing people insurance products. It also offers pension plans, dental, and capitalization plans. The Brokerage segment engages in the brokerage, management, and promotion of pension plans, capitalization, capitalization, and dental plans. BB Seguridade Participações S.A. was incorporated in 2012 and is headquartered in Brasilia, Brazil. BB Seguridade Participações S.A. operates as a subsidiary of Banco do Brasil S.A.

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.