The Zacks Analyst Blog Highlights: Radian Group, Ryland Group, Lennar, PulteGroup and TRI Pointe Homes

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Jun 10, 2014, 09:30 ET

CHICAGO, June 10, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Radian Group Inc. (NYSE:RDN-Free Report), Ryland Group Inc. (NYSE:RYL-Free Report), Lennar Corporation (NYSE:LEN-Free Report) PulteGroup Inc. (NYSE:PHM-Free Report) andTRI Pointe Homes, Inc. (NYSE:TPH-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Monday's Analyst Blog:

Radian Group Upped to Strong Buy

On Jun 7, Zacks Investment Research upgraded Radian Group Inc. (NYSE:RDN-Free Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Radian Group has been witnessing rising earnings estimates on the back of strong first-quarter 2014 results.

Radian Group reported operating net earnings of 42 cents a share, outperforming the Zacks Consensus Estimate by 110% and reversed the loss of 10 cents incurred in the year-ago quarter.

GAAP net income of 94 cents per share rebounded from the year-ago loss of $1.30 per share. The improvement came on the back of higher revenues coupled with lower expenses.

The mortgage insurer has been witnessing a decline in primary default rate since 2009, when it was at the highest level of 18%. Total number of primary delinquent loans decreased 38% year over year with primary default rate of 6.3% at quarter end.

Risk-to-capital ratio was 19.2:1 at quarter end, improving sequentially from 19.4:1 on the back of higher net income but was partially offset by an increase to net risk in force. Statutory capital at quarter end improved 28% year over year to $1.4 billion.

In addition, to provide credit-based services to the mortgage finance market, Radian Group agreed to acquire Clayton Holdings for $305 million cash. The acquisition of Clayton Holdings, a leading provider of outsourced solutions to the mortgage industry, will open up new revenue generating avenues and expand Radian Group's involvement in the residential mortgage market value chain with services.

Strong results along with the strategic acquisition prompted upward revisions in all 4 estimates over the last 30 days. This led to a 77% surge in the Zacks Consensus Estimate for 2014 which is currently pegged at $1.75. The expected long-term growth rate for the stock is 3%.

Ryland Makes Most of the Real Estate Boom

In recent times, the U.S. housing sector has witnessed a resurgence. In a recent survey conducted by Gallup, Americans voted housing as the best long-term investment option — the first time in four years — beating stocks, bonds, CDs/savings and gold.

Accelerating job growth, an improving economy and unlocking pent-up demand are boosting the demand for new homes in spite of skyrocketing prices which hit record highs in the early months of 2014. In order to cater to the high demand for homes in the spring selling season, Ryland Group Inc. (NYSE:RYL-Free Report) is investing heavily in building new homes.

Recently, Ryland unveiled a community of 50 townhomes in Mercer Court in Fairless Hills, PA. These city-inspired townhomes are priced from $270's onward.

The 3-level townhomes offer a storage space in the lower level which can be converted into an additional recreation room. The homes feature open floorplans, gourmet kitchens with center islands connecting the adjoining dining area on the ground level. The owners suite, located upstairs features dual vanities and a walk-in closet. The homes accommodate three bedrooms, 2½ bathrooms and a 1- to 2-car garage.

The Mercer Court community promises a convenient lifestyle in the Pennsbury School District. Additionally, the community is well connected with Philadelphia, New Jersey and Delaware. The townhomes also boast popular shopping, dining and entertainment destinations nearby.

Earlier this month, Ryland Group introduced a luxury community of townhomes called Crown in Gaithersburg, MD. The company has also started construction of a community of townhomes and luxury single family homes at Brick Yard Station in Laurel, MD.

Ryland Group is one of the largest homebuilders in the U.S., with operations in 14 states. Like other homebuilders such as Lennar Corporation (NYSE:LEN-Free Report) and PulteGroup Inc. (NYSE:PHM-Free Report) Ryland has been gaining momentum from the strong housing recovery in the U.S.

Currently, Ryland Homes carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

A stock worth considering in the homebuilding sector is TRI Pointe Homes, Inc. (NYSE:TPH-Free Report) carrying a Zacks Rank #2 (Buy).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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