First American Financial Corporation (FAF) vs Radian Group Inc. (RDN)

First American Financial Corporation and Radian Group Inc. are both Insurance Specialty companies. First American Financial Corporation is the larger, with a market value of $6.7B against $4.4B — 1.5× the size. Radian Group Inc. trades at the lower P/E: 8.4× against 9.2×. Radian Group Inc. grew revenue faster over the last twelve months: 41.9% against 22.6%. Radian Group Inc. has the higher net margin (32.6% vs 9.33%) and the lower return on invested capital (7.69% vs 17.0%). Both pay a dividend; First American Financial Corporation yields more (3.59% vs 3.44%). Across the 23 metrics below, Radian Group Inc. leads on 12 and First American Financial Corporation on 11.

Valuation

Metric FAF RDN Insurance Specialty median
P/E 9.15 8.42 9.15
P/S 0.85 2.72 1.84
P/B 1.20 0.93 1.16
Price to free cash flow 8.16 3.21 8.16
EV/EBITDA 4.07 6.90 7.51
EV/Sales 0.72 3.37 2.17
Earnings yield 10.93% 11.87% 10.79%
Free cash flow yield 12.25% 31.11% 11.79%

Profitability

Metric FAF RDN Insurance Specialty median
Gross margin 100.00% 69.22% 73.81%
Operating margin 15.52% 48.72% 17.70%
Net margin 9.33% 32.60% 13.80%
Free cash flow margin 10.44% 84.53% 34.47%
Return on equity 13.81% 11.53% 12.01%
Return on assets 4.23% 5.30% 4.12%
Return on invested capital 16.97% 7.69% 8.77%

Growth

Metric FAF RDN Insurance Specialty median
Revenue growth (TTM) 22.55% 41.92% 7.53%
EPS growth (last fiscal year) 376.19% 5.61% —
Revenue growth, 5-year CAGR 1.01% (3.61%) 2.24%
Net income growth, 5-year CAGR (2.23%) 8.16% 0.00%

Health

Metric FAF RDN Insurance Specialty median
Debt to equity 0.27 0.26 0.15
Current ratio 1.18 0.39 0.53
Net debt to EBITDA 0.13 1.20 0.28

Dividend

Metric FAF RDN Insurance Specialty median
Dividend yield 3.59% 3.44% 2.60%
Payout ratio 0.90 0.21 0.21

Size

Metric FAF RDN Insurance Specialty median
Market cap 6.70b 4.44b 3.13b

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