Radian Group (NYSE:RDN – Get Free Report) and PayPal (NASDAQ:PYPL – Get Free Report) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, dividends, risk, profitability, analyst recommendations and institutional ownership.
Insider and Institutional Ownership
95.3% of Radian Group shares are held by institutional investors. Comparatively, 68.3% of PayPal shares are held by institutional investors. 2.0% of Radian Group shares are held by company insiders. Comparatively, 0.6% of PayPal 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.
Dividends
Radian Group pays an annual dividend of $1.02 per share and has a dividend yield of 2.8%. PayPal pays an annual dividend of $0.56 per share and has a dividend yield of 1.0%. Radian Group pays out 25.0% of its earnings in the form of a dividend. PayPal pays out 10.7% 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. Radian Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Radian Group has a beta of 0.69, indicating that its stock price is 31% less volatile than the S&P 500. Comparatively, PayPal has a beta of 1.33, indicating that its stock price is 33% more volatile than the S&P 500.
Analyst Ratings
This is a breakdown of current ratings and price targets for Radian Group and PayPal, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Radian Group | 0 | 3 | 6 | 0 | 2.67 |
| PayPal | 6 | 32 | 8 | 0 | 2.04 |
Radian Group presently has a consensus target price of $42.57, indicating a potential upside of 15.89%. PayPal has a consensus target price of $55.94, indicating a potential downside of 4.83%. Given Radian Group’s stronger consensus rating and higher probable upside, analysts plainly believe Radian Group is more favorable than PayPal.
Profitability
This table compares Radian Group and PayPal’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Radian Group | 28.41% | 14.28% | 6.99% |
| PayPal | 13.78% | 24.39% | 5.97% |
Earnings and Valuation
This table compares Radian Group and PayPal”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Radian Group | $1.20 billion | 4.06 | $582.64 million | $4.08 | 9.00 |
| PayPal | $33.17 billion | 1.47 | $5.23 billion | $5.24 | 11.22 |
PayPal has higher revenue and earnings than Radian Group. Radian Group is trading at a lower price-to-earnings ratio than PayPal, indicating that it is currently the more affordable of the two stocks.
Summary
Radian Group beats PayPal on 9 of the 17 factors compared between the two stocks.
About Radian Group
Radian Group Inc. is a mortgage and real estate services company whose primary business is private mortgage insurance. Through its subsidiaries, it provides mortgage insurance to lenders and other housing finance participants in the United States. Mortgage insurance helps protect lenders and investors against losses if borrowers default. It can also support home purchases by allowing qualified borrowers to obtain mortgages with smaller down payments than would otherwise be required. Radian also offers services and solutions related to mortgage risk management.
About PayPal
PayPal Holdings, Inc. operates a global digital payments platform that helps consumers and businesses send and receive payments online and in person. Its services include PayPal checkout and digital wallets, Venmo peer-to-peer payments, Braintree payment processing for merchants, and Xoom international money transfers. The company traces its roots to Confinity, founded in 1998, and the online payments business that developed through its merger with X.com. PayPal became part of eBay in 2002 and was spun off as an independent public company in 2015.
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