Radian Group
RDN
$34.68
+1.64%
Radian Group Inc. is a specialty insurance holding company that provides private mortgage insurance (MI) on residential first-lien mortgage loans to lenders and mortgage credit investors, operating through a single reportable Mortgage Insurance segment. As one of the few active private MI writers in the U.S., Radian occupies an oligopolistic niche alongside peers such as MGIC and Arch MI, giving it pricing discipline and deep integration with the government-sponsored enterprise (GSE) mortgage ecosystem. The current investor narrative is dominated by a tug-of-war between strong headline profitability — Q2 2026 revenue grew 80.9% year-over-year to $575 million with net income of $116 million — and mounting concern over credit quality and housing affordability, which has driven the stock down roughly 6.7% over the past month and 10.3% over three months. Analysts remain constructive (consensus 'buy' with a $44.67 average target), but the wide dispersion between the $36 low and $48 high target reflects genuine disagreement about whether reserve releases and a benign default environment can persist as mortgage rates and home prices pressure borrowers.…
RDN
Radian Group
$34.68
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Investment Opinion: Should I buy RDN Today?
Synthesized recommendation: Hold. Radian is a deeply cyclical mortgage insurer trading at a steep discount to its historical and peer multiples, but near-term credit quality concerns and negative momentum warrant caution. The analyst consensus is 'buy' with an average target of $44.67, implying 31.6% upside, but the wide $36-$48 range and recent price weakness suggest the market is not yet convinced.
The supporting evidence for a Hold is balanced. On the positive side, RDN trades at 8.61x trailing earnings and 6.50x forward earnings, with a 1.04x price-to-book ratio and a 12.19% ROE—metrics that would normally command a much higher multiple. The company generated $1.67 billion in trailing free cash flow and returned $202.9 million to shareholders in Q2 2026 alone through buybacks and dividends. However, revenue growth of 80.9% year-over-year is likely unsustainable, and gross margin compression from 95.7% to 66.1% over two quarters is a red flag. The stock has also underperformed the S&P 500 by 13.46 percentage points over three months, and its 52-week range positioning at 32.4% signals persistent selling pressure.
The biggest risks that could invalidate the thesis are a continued rise in credit costs, a breakdown below the 52-week low of $30.53, and a downward revision to earnings estimates. This Hold would upgrade to Buy if gross margins stabilize above 70% and the stock reclaims the $36-$37 resistance zone, or downgrade to Sell if revenue growth turns negative or the stock breaks below $30.53 on high volume. Relative to its own history, RDN is fairly valued on a book basis (1.04x vs. a range of 0.77x-1.14x) but cheap on earnings (8.61x vs. a historical range of 3.95x-10.95x). The market is pricing in a moderate probability of credit deterioration, and until that uncertainty clears, a Hold is appropriate.
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RDN 12-Month Price Forecast
Radian presents a classic value trap versus deep value debate. The valuation is undeniably cheap at 8.61x trailing earnings and 1.04x book, and the balance sheet is strong with a 0.237 debt-to-equity ratio and $1.67 billion in trailing free cash flow. However, the sharp margin compression and unsustainable revenue spike suggest that current earnings may not be durable, and the stock's persistent underperformance indicates the market is pricing in credit deterioration. The analyst community remains constructive, but the wide target range reflects genuine uncertainty. I would upgrade to bullish if gross margins stabilize above 70% and the stock reclaims $37, or downgrade to bearish if the stock breaks below $30.53 or if forward EPS estimates are revised below $4.50.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Radian Group's 12-month outlook, with a consensus price target around $44.67 and implied upside of +28.8% versus the current price.
Average Target
$44.67
0 analysts
Implied Upside
+28.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$36 - $48
Analyst target range
Six analysts cover Radian Group, with a consensus recommendation of 'buy' (recommendation mean of 1.67 on a scale where 1 is Strong Buy and 5 is Strong Sell), and an average target price of $44.67. Against the current price of $33.93, this implies upside of approximately 31.6%, a substantial premium that suggests analysts believe the recent selloff is overdone. The distribution leans bullish, with recent actions showing B of A Securities upgrading to Buy from Underperform on 2026-04-29 and Keefe, Bruyette & Woods upgrading to Outperform from Market Perform on 2026-02-11, while Barclays has maintained Equal Weight and UBS has stayed Neutral. The consensus EPS estimate of $5.17 for the forward period, against a forward PE of just 6.50x, implies analysts expect earnings to remain robust even as the stock trades at a deep discount. The target range spans from a low of $36.00 to a high of $48.00, a spread of $12.00 or 33% of the average target, which signals meaningful uncertainty about the company's trajectory. The high target of $48 likely assumes multiple expansion back toward 9-10x forward earnings, continued reserve releases, and a stable housing credit environment that allows Radian to sustain its 12%+ ROE. The low target of $36 — still 6.1% above the current price — prices in a more cautious scenario where credit costs rise, margins compress further from Q2's 66.1% gross margin, and the market continues to apply a distressed multiple to book value. The recent institutional actions show a clear pattern of stabilization and selective upgrades rather than downgrades, with no negative rating changes since early 2026, which suggests the analyst community views the recent price weakness as a buying opportunity rather than the start of a fundamental deterioration.
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Bulls vs Bears: RDN Investment Factors
The bear case currently has stronger near-term evidence: RDN is in a clear downtrend, margins are compressing sharply, and the revenue spike appears unsustainable. However, the bull case rests on compelling valuation and balance sheet metrics—8.6x trailing earnings, 1.04x book, 12.2% ROE, and $1.67 billion in trailing free cash flow—that suggest the selloff may be overdone. The single most important tension is whether the Q2 gross margin decline to 66.1% represents a temporary blip or the start of a sustained rise in credit costs; if it is the former, the stock is deeply undervalued, but if it is the latter, current earnings estimates are at risk. Analyst consensus leans bullish with a $44.67 average target, but the wide $36-$48 range shows that even the experts are divided. Until there is clarity on credit trends, the stock is likely to remain range-bound between $30.53 and $37.
Bullish
- Deep Value on Earnings and Book: RDN trades at a trailing PE of 8.61x and a forward PE of just 6.50x, while its price-to-book ratio of 1.04x is essentially at book value. For a company generating a 12.19% ROE, these multiples imply the market is pricing in severe credit deterioration that has not yet materialized in reported results.
- Analyst Consensus Sees 31.6% Upside: Six analysts rate RDN a 'buy' with an average target of $44.67, implying 31.6% upside from the current $33.93. The lowest target of $36 is still 6.1% above the current price, and recent upgrades from B of A and KBW suggest sentiment is stabilizing.
- Fortress Balance Sheet and Cash Generation: RDN carries a debt-to-equity ratio of only 0.237 and a current ratio of 4.28, providing substantial liquidity. Trailing twelve-month free cash flow is $1.67 billion, and Q2 2026 alone generated $627 million in operating cash flow against just $0.97 million in capex.
- Aggressive Capital Returns Support Valuation: In Q2 2026, Radian repurchased $130.3 million of stock and paid $72.6 million in dividends, funded entirely from internal cash generation. The dividend yield of 2.93% is backed by a conservative 25% payout ratio, leaving ample room for continued buybacks that shrink the share count.
Bearish
- Margin Compression Signals Rising Credit Costs: Gross margin collapsed from 95.7% in Q4 2025 to 76.9% in Q1 2026 and just 66.1% in Q2 2026. Operating margin fell from 66.8% to 26.2% over the same period, suggesting claims or loss adjustment expenses are rising faster than premiums.
- Revenue Spike Looks Unsustainable: Q2 2026 revenue of $575 million grew 80.9% year-over-year, but the prior four quarters averaged only $311 million. This spike likely reflects one-time reserve adjustments rather than durable organic growth, and extrapolating it would be a mistake.
- Severe Relative Underperformance and Downtrend: RDN has fallen 10.33% over three months and 6.66% over one month, versus the S&P 500's +3.13% and +2.12%, producing relative strength readings of -13.46 and -8.78. The stock sits at just 32.4% of its 52-week range, signaling a clear intermediate-term downtrend.
- Housing Affordability Pressures Borrowers: Elevated mortgage rates and high home prices are straining borrower budgets, which could lead to higher delinquencies and increased claims for a mortgage insurer. The market's reluctance to pay more than book value suggests deep skepticism about reserve adequacy in this environment.
RDN Technical Analysis
RDN is in a clear intermediate-term downtrend despite a positive 1-year return of +0.30%, as the stock has fallen from a 52-week high of $41.05 to the current $33.93, sitting at just 32.4% of its 52-week range (range low $30.53). That positioning near the lower quartile of the annual range signals that momentum has decisively shifted to the sellers, and the stock is now testing territory that previously attracted value buyers rather than momentum chasers. The +0.30% 1-year gain is essentially flat, meaning all of the past year's appreciation has been erased in recent months — a classic distribution pattern rather than healthy consolidation. Short-term momentum is unambiguously negative: the 1-month change of -6.66% and 3-month change of -10.33% both lag the S&P 500's +2.12% and +3.13% over the same windows, producing relative strength readings of -8.78 and -13.46 respectively. This divergence between flat 1-year performance and sharply negative 3-month performance indicates a trend reversal in progress rather than a temporary pullback, and the 6-month change of -0.70% confirms the deterioration is not a one-month anomaly. The stock's beta of 0.714 means it is roughly 29% less volatile than the market, which cushions downside in absolute terms but also means the -10.33% quarterly decline represents a meaningful underperformance given the low-beta profile. Key support sits at the 52-week low of $30.53, which was nearly touched on 2026-09-30 when the stock closed at $30.61 before bouncing; a breakdown below that level would open the door to a deeper correction and likely trigger momentum-based selling. Resistance is defined by the 52-week high of $41.05, with intermediate resistance around the $36-$37 zone where the stock traded repeatedly in August and September; reclaiming that band would be the first sign of stabilization. The maximum drawdown of -22.92% from peak reflects the severity of the recent selloff, and with a short ratio of 5.8 days, bearish positioning is elevated enough that a positive catalyst could force a sharp short-covering rally.
Beta
0.71
0.71x market volatility
Max Drawdown
-22.9%
Largest decline past year
52-Week Range
$31-$41
Price range past year
Annual Return
+3.3%
Cumulative gain past year
| Period | RDN Return | S&P 500 |
|---|---|---|
| 1m | -0.9% | +1.0% |
| 3m | -9.3% | +2.9% |
| 6m | -3.6% | +8.6% |
| 1y | +3.3% | +14.6% |
| ytd | -3.5% | +12.8% |
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RDN Fundamental Analysis
Radian's revenue trajectory has been volatile but recently explosive: Q2 2026 revenue of $574.96 million grew 80.9% year-over-year versus Q2 2025's $317.82 million, a massive acceleration from the roughly flat $301-$318 million quarterly run-rate seen throughout 2025. However, this spike is largely attributable to the Mortgage Insurance segment's $348.87 million contribution and likely reflects reserve adjustments and premium dynamics rather than sustainable organic growth, as the prior four quarters averaged approximately $311 million. The sequential jump from Q1 2026's $466.34 million to Q2's $574.96 million represents a 23.3% quarter-over-quarter increase, but investors should be cautious about extrapolating this given the lumpy nature of MI revenue recognition. Profitability remains robust: Q2 2026 net income was $115.91 million with a net margin of 20.2%, though this is down from Q1 2026's $124.09 million and 26.6% margin, and well below Q4 2025's $155 million and 51.5% margin. Gross margin in Q2 2026 was 66.1%, a sharp compression from 76.9% in Q1 2026 and 95.7% in Q4 2025, suggesting rising claims or loss adjustment expenses are eating into the unusually high margins that characterized 2025. The operating margin of 26.2% in Q2 2026 is still healthy for a specialty insurer but represents a meaningful step down from the 37.2% and 66.8% recorded in the prior two quarters. The balance sheet is conservatively positioned with a debt-to-equity ratio of just 0.237 and a current ratio of 4.28, providing substantial liquidity cushion. Free cash flow on a trailing twelve-month basis is a robust $1.67 billion, and Q2 2026 alone generated $627 million in operating cash flow against just $0.97 million in capital expenditures, demonstrating the capital-light nature of the MI business. ROE of 12.19% and ROA of 5.29% are solid for the sector, and the company returned capital aggressively in Q2 2026 with $130.3 million in stock repurchases and $72.6 million in dividends, funded entirely from internal cash generation.
Quarterly Revenue
$574959000.0B
2026-06
Revenue YoY Growth
+80.9%
YoY Comparison
Gross Margin
66.1%
Latest Quarter
Free Cash Flow
$1.7B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is RDN Overvalued?
Because Radian is solidly profitable with trailing net income of approximately $116 million in the most recent quarter and positive EPS of $0.117 (likely a quarterly figure reflecting the data source's convention), the PE ratio is the appropriate primary valuation metric. The trailing PE of 8.61x is remarkably low in absolute terms, and the forward PE of just 6.50x implies the market expects earnings to grow substantially — the 24.5% compression between trailing and forward multiples suggests analysts forecast EPS expanding to the $5.17 average estimate, which would represent a dramatic improvement from current levels. This wide gap between trailing and forward PE signals that the market is pricing in either a normalization of earnings after a temporary dip or skepticism about the sustainability of current profitability. On a price-to-book basis, RDN trades at just 1.04x, essentially at book value, which for a mortgage insurer with a 12.2% ROE implies the market is assigning no franchise premium and may be pricing in credit deterioration. Compared to the broader Financial Services sector, where specialty insurers with similar ROE profiles often trade at 1.5-2.0x book and 12-15x earnings, RDN's 8.6x trailing PE and 1.04x PB represent a substantial discount of roughly 30-40% on earnings and 30-50% on book value. The PS ratio of 3.98x and EV/EBITDA of 6.94x further confirm the cheapness, though the elevated PCF ratio of 41.4x reflects the volatility of cash flows inherent to the MI business model. Historically, RDN's PE ratio has ranged from a low of 3.95x in Q3 2022 to a high of 10.95x in Q2 2026, placing the current 8.61x in the upper-middle portion of its own historical band. The PB ratio of 1.04x is near the middle of its multi-year range (0.77x low in Q4 2022 to 1.14x high in Q1 2024), suggesting the stock is neither historically cheap nor expensive on a book basis. The dividend yield of 2.93% with a payout ratio of just 25.0% provides income support and leaves ample room for continued buybacks, but the market's reluctance to pay more than book value suggests deep skepticism about credit conditions and reserve adequacy.
PE
8.6x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 4x~11x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
6.9x
Enterprise Value Multiple
Investment Risk Disclosure
Radian's financial risks are centered on the sustainability of its recent profitability. Q2 2026 gross margin fell to 66.1% from 95.7% in Q4 2025, and operating margin dropped to 26.2% from 66.8%, indicating that claims or loss adjustment expenses are rising. While the balance sheet is conservatively positioned with a debt-to-equity ratio of 0.237 and a current ratio of 4.28, the company's revenue is highly concentrated in a single reportable segment—Mortgage Insurance—and is sensitive to housing credit conditions. The Q2 revenue spike of 80.9% year-over-year is unlikely to repeat, and if reserve releases reverse, earnings could decline sharply from the $5.17 consensus EPS estimate.
Market and competitive risks include valuation compression if credit conditions worsen. RDN trades at 1.04x book, and while that is below the 1.5-2.0x multiples of some specialty insurers, the market is clearly applying a distressed multiple due to housing affordability concerns. With a beta of 0.714, the stock is less volatile than the market, but it has still underperformed the S&P 500 by 13.46 percentage points over three months, reflecting sector-specific headwinds. Competition from government-backed mortgage programs and other private MI writers like MGIC and Arch MI could pressure pricing, and any regulatory changes to the GSE framework would directly impact Radian's business model.
The worst-case scenario would be a sharp deterioration in housing credit, leading to a surge in mortgage defaults and a reversal of prior reserve releases. In that scenario, RDN could retest its 52-week low of $30.53, representing a decline of approximately 10% from the current price of $33.93. If credit conditions worsen beyond that, the analyst low target of $36 would likely be revised down, and the stock could fall to the $25-$28 range, implying a 17-26% loss. The maximum drawdown over the past year was already -22.92%, so a similar or larger drawdown is plausible if the credit cycle turns negative.
FAQ
The most severe risk is a housing credit downturn that forces Radian to increase reserves and compresses margins further. Gross margin already fell from 95.7% to 66.1% in two quarters, and a continuation of that trend would threaten earnings. Second, the stock is in a clear downtrend, down 10.33% over three months and underperforming the S&P 500 by 13.46 percentage points, with a breakdown below $30.53 potentially triggering momentum selling. Third, revenue concentration in a single segment (Mortgage Insurance) makes the company vulnerable to regulatory changes to the GSE framework or increased competition from MGIC and Arch MI. Fourth, the wide analyst target range of $36-$48 reflects genuine uncertainty, and any downward revision to the $5.17 EPS estimate would likely pressure the stock.
Our 12-month forecast has three scenarios. The base case (55% probability) targets $38-$44, assuming credit conditions normalize and the stock recovers toward the analyst average of $44.67. The bull case (25% probability) targets $44-$48, driven by multiple expansion, reserve releases, and rate cuts. The bear case (20% probability) targets $30-$36, assuming a housing credit downturn and margin compression below 60%. The most likely scenario is the base case, which assumes no severe recession and forward EPS meeting the $5.17 consensus. Key to this forecast is whether gross margins stabilize above 65-70% in the coming quarters.
RDN appears undervalued on most metrics. Its trailing PE of 8.61x and forward PE of 6.50x are well below the 12-15x range typical for specialty insurers with similar ROE profiles. The price-to-book ratio of 1.04x is near the middle of its historical range (0.77x-1.14x) but represents a 30-50% discount to peers that often trade at 1.5-2.0x book. The PS ratio of 3.98x and EV/EBITDA of 6.94x further confirm the cheapness. However, the market is pricing in credit deterioration, as evidenced by the discount to book despite a 12.19% ROE. If credit conditions remain benign, the stock is undervalued; if they worsen, the discount may be justified.
RDN presents a high-risk, high-reward opportunity. The stock trades at just 8.61x trailing earnings and 1.04x book value, with a 12.19% ROE and $1.67 billion in trailing free cash flow, which suggests deep undervaluation if credit conditions hold. Analyst consensus is 'buy' with a $44.67 average target, implying 31.6% upside. However, the stock has fallen 10.33% over three months and gross margins have compressed from 95.7% to 66.1% in two quarters, indicating rising credit costs. For value investors with a 12-24 month horizon and tolerance for volatility, RDN could be a good buy on further weakness near $30.53. For short-term traders, the negative momentum and relative underperformance make it a risky entry.
RDN is better suited for medium-to-long-term investment (12-24 months) than short-term trading. The stock's beta of 0.714 means it is less volatile than the market, but it is still subject to cyclical credit swings that can take quarters to play out. The dividend yield of 2.93% and low payout ratio of 25% provide some income support, and the company's aggressive buybacks ($130.3 million in Q2 2026) enhance long-term shareholder value. However, the current downtrend and margin uncertainty make short-term trading risky. A minimum holding period of 12 months is suggested to allow credit conditions to clarify and for the valuation discount to potentially narrow.