AGM
Federal Agricultural Mortgage
$209.51
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 11.3% below fair value
You pay
$209.51
Bear
$165.34
Fair
$236.20
Bull
$307.06
Bear
$165.34
-21.1%
ROTCE 9.0% → 0.86x TBV
Fair
$236.20
+12.7%
ROTCE 12.1% → 1.38x TBV
Bull
$307.06
+46.6%
ROTCE 13.9% → 1.69x TBV
Key Value Driver
ROTCE (12.1%) vs. cost of equity (9.8%)
Implied Market Multiple
1.33x
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