Critical Comparison: Walker & Dunlop (NYSE:WD) and Radian Group (NYSE:RDN)

Walker & Dunlop (NYSE:WD) and Radian Group (NYSE:RDN) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, earnings and institutional ownership.

Earnings & Valuation

This table compares Walker & Dunlop and Radian Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Walker & Dunlop	$1.23 billion	0.93	$57.08 million	$1.12	29.79
Radian Group	$1.20 billion	3.84	$582.64 million	$3.89	8.93

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

Volatility and Risk

Walker & Dunlop has a beta of 1.52, indicating that its stock price is 52% more 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.

Analyst Recommendations

This is a breakdown of current recommendations for Walker & Dunlop and Radian Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Walker & Dunlop	1	0	5	0	2.67
Radian Group	0	3	6	0	2.67

Walker & Dunlop presently has a consensus price target of $59.75, indicating a potential upside of 79.07%. Radian Group has a consensus price target of $43.14, indicating a potential upside of 24.23%. Given Walker & Dunlop’s higher possible upside, research analysts clearly believe Walker & Dunlop is more favorable than Radian Group.

Insider & Institutional Ownership

81.0% of Walker & Dunlop shares are owned by institutional investors. Comparatively, 95.3% of Radian Group shares are owned by institutional investors. 4.0% of Walker & Dunlop shares are owned by insiders. Comparatively, 2.0% of Radian Group shares are owned by 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Walker & Dunlop	2.94%	7.25%	2.31%
Radian Group	32.60%	13.65%	6.91%

Dividends

Walker & Dunlop pays an annual dividend of $2.72 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%. Walker & Dunlop pays out 242.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Radian Group pays out 26.2% of its earnings in the form of a dividend. Walker & Dunlop has increased its dividend for 7 consecutive years and Radian Group has increased its dividend for 6 consecutive years. Walker & Dunlop is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Radian Group beats Walker & Dunlop on 9 of the 16 factors compared between the two stocks.

About Walker & Dunlop

Walker & Dunlop, Inc. is a holding company, which engages in the provision of commercial real estate and finance services. It operates through the following segments: Capital Markets, Servicing and Asset Management, and Corporate. The Capital Markets segment offers a comprehensive range of commercial real estate finance products to customers. The Servicing and Asset Management segment includes servicing and asset-managing and managing third-party capital investments. The Corporate segment consists primarily of the company’s treasury operations and other corporate-level activities. The company was founded by Oliver Walker and Laird Dunlop in 1937 and is headquartered in Bethesda, MD.

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.