ALLY
Ally Financial Inc.
$37.68
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 1.6% below fair value
You pay
$37.68
Bear
$26.80
Fair
$38.28
Bull
$49.76
Bear
$26.80
-28.9%
ROTCE 4.1% → 0.30x TBV
Fair
$38.28
+1.6%
ROTCE 5.5% → 0.30x TBV
Bull
$49.76
+32.1%
ROTCE 6.3% → 0.37x TBV
Adjust Assumptions
5.5%
10.3%
Key Value Driver
ROTCE (5.5%) vs. cost of equity (10.3%)
Implied Market Multiple
0.74x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (38 analysts)
$49.70
Divergence from AlphaVal
23%
Summary
With ROTCE of 5.5% vs. 10.3% cost of equity, fair P/TBV is 0.30x on $50.95 tangible book, implying $38.28 per share. DDM cross-check: $12.76.
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 (5.5%) is below the minimum investors require (10.3%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $12.76 (67% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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