Radian Group Inc. RDN has been trading below its 50-day simple moving average (SMA), signaling a short-term bearish trend. As of Jan. 17, 2025, its share price was $32.94, down 13% from its 52-week high of $37.86.

The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. It is considered particularly important as it is the first marker of an uptrend or downtrend.

RDN Trading Below 50-Day Moving Average

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With a market capitalization of $4.90 billion, Radian Group is set to grow on the back of improving mortgage insurance portfolio, declining claims, financial flexibility and effective capital deployment.

Radian Group shares have gained 12.4% in the past year, underperforming its industry, the Finance sector, as well the Zacks S&P 500 composite’s return.

RDN Vs. Industry, Sector and S&P 500 in 1 Year

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RDN’s Encouraging Growth Projections

The Zacks Consensus Estimate for Radian Group’s 2025 revenues indicates an increase of 4.8% from the corresponding 2024 estimates.

Earnings of Radian Group grew 8.5% in the last five years. RDN has a solid surprise history. The multi-line insurer has a solid track record of beating earnings estimates in each of the last four quarters, the average being 17.65%.

RDN’s Return on Capital

Return on invested capital in the trailing 12 months was 7.8%, better than the industry average of 2.3%, reflecting RDN’s efficiency in utilizing funds to generate income.

Factors Acting in Favor of RDN

The multi-line insurer has intensified its focus on the core business and services with higher growth potential, ensuring 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.

Radian Group has been witnessing a declining pattern of claim filings. Thus, we expect paid claims to decrease further. A decline in loss and claims will strengthen the balance sheet and hence improve its financial profile.

Based on current market projections for 2025, Radian expects the MI market to be approximately 10% larger in 2025 than in 2024. Riding on ongoing homebuyer demand and an expected decline in interest rates, which is a positive for mortgage insurers, Radian expects a healthy purchase market going forward. The company believes that the resulting pent-up demand provides strong support for future purchase volume, which drives the growth in large and valuable insurance in-force portfolio. 

Radian Group has been strengthening its capital position with capital contribution, reinsurance transactions and cash position. This, in turn, aids the insurer to engage in wealth distribution. 

The 9% increase in quarterly dividend in the first quarter of 2024 marks the fifth consecutive year in which RDN has increased the quarterly dividend, with a total rise of 96% over the past four years. Its current dividend yield of 2.9% betters the industry average of 2.3%, making it an attractive pick for yield-seeking investors.

Attractive Valuation

RDN shares are trading at a price-to-book multiple of 1.04, lower than the industry average of 2.37. Its pricing, at a discount to the industry average, gives a better entry point to investors. 

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

Final Take on RDN

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

RDN should also benefit from a higher return on capital as well as the affordability of shares. It is, therefore, wise to hold on to this Zacks Rank #3 (Hold) stock. 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

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