AGM
Federal Agricultural Mortgage
$201.06
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 15.2% below fair value
You pay
$201.06
Bear
$165.90
Fair
$237.00
Bull
$308.10
Bear
$165.90
-17.5%
ROTCE 9.0% → 0.81x TBV
Fair
$237.00
+17.9%
ROTCE 12.1% → 1.30x TBV
Bull
$308.10
+53.2%
ROTCE 13.9% → 1.59x TBV
Adjust Assumptions
12.1%
10.2%
Key Value Driver
ROTCE (12.1%) vs. cost of equity (10.2%)
Implied Market Multiple
1.27x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (5 analysts)
$233.00
Divergence from AlphaVal
2%
Summary
With ROTCE of 12.1% vs. 10.2% cost of equity, fair P/TBV is 1.30x on $158.04 tangible book, implying $237.00 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