Is Radian Group (RDN) Undervalued? A Fresh Look at Fair Value and Long-Term Returns

Radian Group (RDN) shares have seen mild movement this week, with the stock closing at $35. Over the past month, it edged up less than 1%, while the three-month window shows a small decline.

See our latest analysis for Radian Group.

After a fairly quiet few weeks, Radian Group’s momentum appears to be leveling out. The stock’s latest share price sits at $35, and while the past quarter was unremarkable, its one-year total shareholder return of 5.4% highlights steady, if modest, long-term rewards for patient investors.

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With steady returns and a share price just under analyst targets, the question now becomes whether Radian Group is trading at a discount to its true value, or if all future growth is already priced in.

Most Popular Narrative: 9.5% Undervalued

Radian Group's widely followed narrative puts its fair value at $38.67, which is nearly $4 higher than the most recent closing price. This narrative weighs current housing market tailwinds and operational discipline against slower diversification and tightening sector dynamics.

The ongoing entry of millennials and first-time homebuyers into the housing market is driving persistently strong housing demand. This is reflected in Radian's all-time high mortgage insurance in force and continued growth in new insurance written, supporting future revenue growth. Housing supply constraints and elevated home prices are resulting in higher loan-to-value ratios, which increases the need for private mortgage insurance providers like Radian and bolsters the long-term stability of premium revenue and portfolio persistency.

Read the complete narrative.

Wondering what internal assumptions actually push that value above today's price? The narrative's outcome hinges on future revenue and profit margins, but the real surprise is how a sector-specific multiple drives the entire calculation. Uncover the logic behind this target by exploring the full details.

Result: Fair Value of $38.67 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing dependence on mortgage insurance combined with persistent housing affordability challenges could quickly put pressure on Radian Group’s earnings outlook.

Find out about the key risks to this Radian Group narrative.

Build Your Own Radian Group Narrative

If you’re keen to dig deeper or want to put your own spin on the story, you can explore the data and build your perspective in just minutes. Do it your way

A great starting point for your Radian Group research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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