AFRM
Affirm Holdings, Inc.
$70.23
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 146.2% above fair value
Bear
$28.53
-59.4%
ROTCE 4.0% → 0.30x TBV
Fair
$28.53
-59.4%
ROTCE 2.1% → 0.30x TBV
Bull
$28.53
-59.4%
ROTCE 2.4% → 0.30x TBV
Key Value Driver
ROTCE (2.1%) vs. cost of equity (14.0%)
Implied Market Multiple
9.33x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $89.82 from 35 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $28.53 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.
Return on equity (2.1%) is below the minimum investors require (14.0%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $89.82 (from 35 analysts). Our estimate is 97% below 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