Critical Analysis: Block (NYSE:XYZ) versus Radian Group (NYSE:RDN)

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

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Radian Group	$1.20 billion	3.77	$582.64 million	$3.89	8.77
Block	$24.19 billion	1.93	$1.31 billion	$0.56	139.07

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

Institutional and Insider Ownership

95.3% of Radian Group shares are held by institutional investors. Comparatively, 70.4% of Block shares are held by institutional investors. 2.0% of Radian Group shares are held by company insiders. Comparatively, 11.4% of Block shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Radian Group	32.60%	13.65%	6.91%
Block	1.43%	8.10%	4.53%

Volatility & Risk

Radian Group has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500. Comparatively, Block has a beta of 2.55, indicating that its stock price is 155% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Radian Group and Block, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Radian Group	0	3	6	0	2.67
Block	0	9	29	4	2.88

Radian Group currently has a consensus target price of $43.14, suggesting a potential upside of 26.49%. Block has a consensus target price of $95.39, suggesting a potential upside of 22.49%. Given Radian Group’s higher possible upside, equities analysts plainly believe Radian Group is more favorable than Block.

Summary

Block beats Radian Group on 8 of the 15 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 Block

Square, Inc. provides payment and point-of-sale solutions in the United States and internationally. The company's commerce ecosystem includes point-of-sale software and hardware that enables sellers to turn mobile and computing devices into payment and point-of-sale solutions. It offers hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts EMV® chip cards and Near Field Communication payments; Chip card reader, which accepts EMV® chip cards and enables swiped transactions of magnetic stripe cards; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; and Square Register that combines its hardware, point-of-sale software, and payments technology, as well as managed payments solutions. The company also provides Square Point of Sale software; Cash App, which provides access to the financial system, allowing customers to electronically send, store, and spend money; Caviar, a food ordering platform for restaurants to offer food ordering, pickup and delivery, to their customers; and Square Capital that facilitates loans to sellers based on real-time payment and point-of-sale data. Square, Inc. was founded in 2009 and is headquartered in San Francisco, California.