RDN Stock Trading at a Discount to Industry at 0.98X: Time to Buy?

Radian Group Inc.’s RDN shares are trading at a discount compared with the Zacks Multi-line Insurance industry. Its forward price-to-book value of 0.98X is lower than the industry average of 2.33X, the Finance sector’s 4.24X and the Zacks S&P 500 composite’s 8.31X.
The insurer has a market capitalization of $4.69 billion. The average volume of shares traded in the last three months was 1.17 million. The insurer’s earnings have a solid track record of beating estimates in each of the last four quarters, with an average of 9.59%.

Shares of MGIC Investment Corporation MTG, Assurant, Inc. AIZ and Old Republic International Corporation ORI are also trading at a discount to the industry average.

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Shares of Radian Group closed at $34.45 on March 3, near its 52-week high of $38.84. This proximity underscores investor confidence. It has the ingredients for further price appreciation. The stock is trading above the 50-day simple moving average (“SMA”) of $34.33, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.

RDN Is an Outperformer

Shares of Radian Group have gained 8.4% in the past year against the industry’s loss of 1.6%.

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RDN’s Encouraging Growth Projections

The Zacks Consensus Estimate for Radian Group’s 2026 earnings per share (EPS) indicates a year-over-year increase of 6%.
The consensus estimate for 2027 EPS and revenues indicates an increase of 16.6% and 2.7%, respectively, from the corresponding estimates of 2026.

Earnings have grown 10.4% in the past five years, better than the industry average of 7.8%.

Average Target Price for RDN Suggests Upside

Based on short-term price targets offered by six analysts, the Zacks average price target is $40 per share. The average suggests a potential 14.4% upside from the last closing price.

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RDN’s Favorable Return on Capital

Return on invested capital (“ROIC”) has been increasing over the last few quarters, while the company raised its capital investment over the same time frame. This reflects RDN’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 6.58%, better than the industry average of 2%.

Key Points to Note for RDN

Radian Group’s heightened focus on the core business and services with higher growth potential ensures a predictable and recurring fee-based revenue stream.

New business, combined with increasing annual persistency, should drive continued growth of the insurance-in-force portfolio. Radian Group’s mortgage insurance portfolio creates a strong foundation for future earnings. RDN has been witnessing a declining pattern of claim filings. We expect paid claims to decline further, thus strengthening the balance sheet and improving its financial profile.

Radian Group completed its strategic acquisition of Inigo in February 2026. With this acquisition, Radian Group will expand from a leading U.S. private mortgage insurer into a global, diversified multi-line specialty insurer, significantly increasing its product expertise and capabilities and optimizing the deployment of the excess capital.

Radian Group projects mid-teens percentage growth in earnings per share and approximately a 200-basis point increase in return on equity in the first full year after the transaction is closed in early 2026. RDN also expects the deal to double its total annual revenues, providing flexibility to deploy capital across multiple insurance lines through various business cycles.

Radian Group has also agreed to divest Mortgage Conduit, Title and Real Estate Services businesses. With this divestiture, the insurer intends to simplify its operations and focus on the new insurance venture, a global multi-line specialty insurance business.

This mortgage insurer has been strengthening its capital position with capital contributions, reinsurance transactions and cash position. This helps Radian Group engage in wealth distribution via dividend hikes and share buybacks.

End Notes

Improving mortgage insurance portfolio, declining claims, a solid capital position, and effective capital deployment should continue to favor mortgage insurers over the long term.

The 4.1% increase in quarterly dividend in the first quarter of 2025 marks the sixth consecutive year. RDN has increased the quarterly dividend, which has more than doubled over the past five years. The company’s current dividend yield of 2.9% betters the industry average of 2.3%, making it an attractive pick for yield-seeking investors.

Its solid growth projections as well as attractive valuations are other positives. Coupled with optimistic analyst sentiment and favorable ROIC, the time appears right for potential investors to bet on this Zacks Rank #2 (Buy) insurer. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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MGIC Investment Corporation (MTG): Free Stock Analysis Report

Assurant, Inc. (AIZ): Free Stock Analysis Report

Radian Group Inc. (RDN): Free Stock Analysis Report

Old Republic International Corporation (ORI): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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