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GuruFocus has detected 4 Warning Signs with Radian Group Inc \$RDN.
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Intrinsic Value: Projected FCF
\$-3.23 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, Radian Group Inc's projected FCF intrinsic value is \$-3.23. The stock price of Radian Group Inc is \$17.75. Therefore, Radian Group Inc's Price to Intrinsic Value: Projected FCF Ratio of today is 0.0.

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of Radian Group Inc was 1.79. The lowest was 0.00. And the median was 0.68.

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding

Here Radian Group Inc's FCF(6 year avg) is calculate as

 201409 201412 201503 201506 201509 201512 201603 201606 201609 201612 total_freecashflow 34 69 -4 -76 52 13 35 103 124 84 201203 201206 201209 201212 201303 201306 201309 201312 201403 201406 total_freecashflow -155 -208 -80 -69 -166 -126 -279 -100 -140 -128 201103 201106 201109 201112 total_freecashflow -262 -353 -154 -132

Add all the Free Cash Flow together and divide 6 will get Radian Group Inc's FCF(6 year avg) = \$-319.16.

Radian Group Inc's Intrinsic Value: Projected FCF for today is calculated as

 Intrinsic Value = (Growth Multiple * Free Cash Flow(6 year avg) + Total Equity(Dec16) * 0.8) / Shares Outstanding = (9.52035159596 * -319.160666667 + 2872.286 * 0.8) / 229.258 = -3.23

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

Radian Group Inc's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

 Price to Intrinsic Value: Projected FCF = Share Price / Intrinsic Value: Projected FCF = 17.75 / -3.23082711299 =

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.