Are Investors Undervaluing Radian (RDN) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Radian (RDN) is a stock many investors are watching right now. RDN is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 7.01, while its industry has an average P/E of 9.61. Over the last 12 months, RDN's Forward P/E has been as high as 11.87 and as low as 5.88, with a median of 7.65.
Investors should also recognize that RDN has a P/B ratio of 1.27. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.41. Over the past 12 months, RDN's P/B has been as high as 1.67 and as low as 1.01, with a median of 1.35.
Finally, investors will want to recognize that RDN has a P/CF ratio of 5.58. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. RDN's P/CF compares to its industry's average P/CF of 9.25. RDN's P/CF has been as high as 20.04 and as low as 5.14, with a median of 8.34, all within the past year.
These are only a few of the key metrics included in Radian's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, RDN looks like an impressive value stock at the moment.
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