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RDN (Radian Group) ROIC % : 8.75% (As of Jun. 2024)


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What is Radian Group ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Radian Group's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2024 was 8.75%.

As of today (2024-10-31), Radian Group's WACC % is 7.87%. Radian Group's ROIC % is 8.97% (calculated using TTM income statement data). Radian Group generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.


Radian Group ROIC % Historical Data

The historical data trend for Radian Group's ROIC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Radian Group ROIC % Chart

Radian Group Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
ROIC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 10.97 6.14 8.50 10.91 9.16

Radian Group Quarterly Data
Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24
ROIC % Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 9.06 9.62 8.52 9.11 8.75

Competitive Comparison of Radian Group's ROIC %

For the Insurance - Specialty subindustry, Radian Group's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Radian Group's ROIC % Distribution in the Insurance Industry

For the Insurance industry and Financial Services sector, Radian Group's ROIC % distribution charts can be found below:

* The bar in red indicates where Radian Group's ROIC % falls into.



Radian Group ROIC % Calculation

Radian Group's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:

ROIC % (A: Dec. 2023 )
=NOPAT/Average Invested Capital
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2022 ) + Invested Capital (A: Dec. 2023 ))/ count )
=857.182 * ( 1 - 21.42% )/( (7067.0823 + 7636.9634)/ 2 )
=673.5736156/7352.02285
=9.16 %

where

Invested Capital(A: Dec. 2022 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Balance Sheet Cash And Cash Equivalents - 5% * Revenue )
=7063.729 - 0 - ( 56.183 - 5% * 1190.726 )
=7067.0823

Invested Capital(A: Dec. 2023 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Balance Sheet Cash And Cash Equivalents - 5% * Revenue )
=7593.933 - 0 - ( 18.999 - 5% * 1240.588 )
=7636.9634

Radian Group's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jun. 2024 is calculated as:

ROIC % (Q: Jun. 2024 )
=NOPAT/Average Invested Capital
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (Q: Mar. 2024 ) + Invested Capital (Q: Jun. 2024 ))/ count )
=860.748 * ( 1 - 19.25% )/( (7748.8429 + 8131.90935)/ 2 )
=695.05401/7940.376125
=8.75 %

where

Invested Capital(Q: Mar. 2024 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Balance Sheet Cash And Cash Equivalents - 5% * Revenue )
=7759.865 - 0 - ( 26.993 - 5% * 319.418 )
=7748.8429

Invested Capital(Q: Jun. 2024 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Balance Sheet Cash And Cash Equivalents - 5% * Revenue )
=8129.643 - 0 - ( 13.791 - 5% * 321.147 )
=8131.90935

Note: The EBIT data used here is four times the quarterly (Jun. 2024) data.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Radian Group  (NYSE:RDN) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROIC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Radian Group's WACC % is 7.87%. Radian Group's ROIC % is 8.97% (calculated using TTM income statement data). Radian Group generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases. Radian Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.


Radian Group ROIC % Related Terms

Thank you for viewing the detailed overview of Radian Group's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.


Radian Group Business Description

Traded in Other Exchanges
N/A
Address
550 East Swedesford Road, Suite 350, Wayne, PA, USA, 19087
Radian Group Inc provides mortgage insurance and services to the real estate and mortgage finance industries. Radian's mortgage insurance provides coverage to lending institutions throughout the United States. Its services include analytics and consulting for buyers and sellers of, and investors in, mortgage- and real estate-related loans and securities and other asset-backed securities. Insurance premiums account for more than three fourths of the company's revenue. Services revenue and investment income are the other principal sources of revenue. It operates in two segments: Mortgage and homegenius. The Mortgage segment earns the majority of revenue.
Executives
Derek Brummer officer: Chief Risk Officer RADIAN GROUP INC., 1601 MARKET ST, PHILADELPHIA PA 19103
Mary Dickerson officer: EVP Chief People Officer RADIAN GROUP INC., 1500 MARKET ST., #2050W, PHILADELPHIA PA 19102
Robert Quigley officer: Sr. Vice President, Controller C/O RADIAN,, 1500 MARKET ST., #2050W, PHILADELPHIA PA 19102
Eric Ray officer: Sr, Executive Vice President C/O RADIAN, 1500 MARKET ST., #2050W, PHILADELPHIA PA 19102
Edward J Hoffman officer: SVP, Secretary and General Cou 1601 MARKET STREET, PHILADELPHIA PA 19103
Sumita Pandit officer: Sr. EVP, Chief Growth Officer 550 EAST SWEDESFORD RD., #350, WAYNE PA 19087
Noel Joseph Spiegel director RADIAN GROUP INC., 1601 MARKET STREET, PHILADELPHIA PA 19103
Brien Mcmahon officer: EVP & Chief Franchise Officer 1500 MARKET ST., WEST TOWER, #2050, PHILADELPHIA PA 19102
Lisa Mumford director 6 BEACHWOOD COURT, DIX HILLS NY 11746
Gregory Serio director RADIAN GROUP INC., 1601 MARKET ST., PHILADELPHIA PA 19103
Howard Bernard Culang director 9 MARISSA COURT, ATLANTIC HIGHLANDS NJ 07716
Lisa Hess director RADIAN GROUP, 1601 MARKET ST, PHILADELPHIA PA 19103
Margaret Anne Leyden director 550 E. SWEDESFORD RD.,, STE 350, WAYNE PA 19087
Fawad Ahmad director C/) RADIAN GROUP INC., 550 E. SWEDESFORD RD., #350, WAYNE PA 19087
Richard G Thornberry director, officer: Chief Executive Officer RADIAN, 1601 MARKET ST, PHILADELPHIA PA 19103