RDN
Radian Group Inc.
$36.43
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 47.9% below fair value
You pay
$36.43
Bear
$43.93
Fair
$69.88
Bull
$85.46
Bear
$43.93
+20.6%
ROTCE 9.2% → 1.23x TBV
Fair
$69.88
+91.8%
ROTCE 12.2% → 1.95x TBV
Bull
$85.46
+134.6%
ROTCE 14.1% → 2.39x TBV
Adjust Assumptions
12.2%
8.2%
Key Value Driver
ROTCE (12.2%) vs. cost of equity (8.2%)
Implied Market Multiple
1.02x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (22 analysts)
$41.00
Divergence from AlphaVal
70%
Summary
With ROTCE of 12.2% vs. 8.2% cost of equity, fair P/TBV is 1.95x on $35.81 tangible book, implying $69.88 per share. DDM cross-check: $68.28.
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 70% 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