RDN
Radian Group Inc.
$34.04
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 51.5% below fair value
You pay
$34.04
Bear
$44.10
Fair
$70.15
Bull
$85.78
Bear
$44.10
+29.5%
ROTCE 9.2% → 1.22x TBV
Fair
$70.15
+106.1%
ROTCE 12.2% → 1.95x TBV
Bull
$85.78
+152.0%
ROTCE 14.1% → 2.38x TBV
Adjust Assumptions
12.2%
8.2%
Key Value Driver
ROTCE (12.2%) vs. cost of equity (8.2%)
Implied Market Multiple
0.95x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (22 analysts)
$41.00
Divergence from AlphaVal
71%
Summary
With ROTCE of 12.2% vs. 8.2% cost of equity, fair P/TBV is 1.95x on $36.00 tangible book, implying $70.15 per share. DDM cross-check: $68.04.
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 $41.00 (from 22 analysts). Our estimate is 71% 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