RDN
Radian Group Inc.
$39.38
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 37.3% below fair value
You pay
$39.38
Bear
$39.49
Fair
$62.82
Bull
$76.82
Bear
$39.49
+0.3%
ROTCE 9.2% → 1.22x TBV
Fair
$62.82
+59.5%
ROTCE 12.2% → 1.94x TBV
Bull
$76.82
+95.1%
ROTCE 14.1% → 2.37x TBV
Key Value Driver
ROTCE (12.2%) vs. cost of equity (8.2%)
Implied Market Multiple
1.1x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $43.00 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $62.82 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $43.00 (from 22 analysts). Our estimate is 61% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly