AFG
American Financial Group, Inc.
$141.92
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 23.4% below fair value
You pay
$141.92
Bear
$143.58
Fair
$185.20
Bull
$185.20
Bear
$143.58
+1.2%
ROTCE 15.2% → 3.10x TBV
Fair
$185.20
+30.5%
ROTCE 20.2% → 4.00x TBV
Bull
$185.20
+30.5%
ROTCE 23.3% → 4.00x TBV
Key Value Driver
ROTCE (20.2%) vs. cost of equity (7.6%)
Implied Market Multiple
2.83x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $140.00 from 17 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $185.20 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.
Dividend-based valuation: $106.91 (47% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $140.00 (from 17 analysts). Our estimate is 43% 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