AFG
American Financial Group, Inc.
$132.90
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 29.4% below fair value
You pay
$132.90
Bear
$140.02
Fair
$188.33
Bull
$188.33
Bear
$140.02
+5.4%
ROTCE 15.2% → 2.97x TBV
Fair
$188.33
+41.7%
ROTCE 20.2% → 4.00x TBV
Bull
$188.33
+41.7%
ROTCE 23.3% → 4.00x TBV
Key Value Driver
ROTCE (20.2%) vs. cost of equity (7.8%)
Implied Market Multiple
2.65x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $152.50 from 17 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $188.33 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Wall Street's average price target is $152.50 (from 17 analysts). Our estimate is 31% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly