AGM
Federal Agricultural Mortgage Corporation
$177.61
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 24.8% below fair value
You pay
$177.61
Bear
$165.34
Fair
$236.20
Bull
$307.06
Bear
$165.34
-6.9%
ROTCE 9.0% → 0.84x TBV
Fair
$236.20
+33.0%
ROTCE 12.1% → 1.34x TBV
Bull
$307.06
+72.9%
ROTCE 13.9% → 1.65x TBV
Key Value Driver
ROTCE (12.1%) vs. cost of equity (10.0%)
Implied Market Multiple
1.13x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $233.00 from 5 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $236.20 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.
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