AMBC
Ambac Financial Group, Inc.
$8.29
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 88.7% below fair value
You pay
$8.29
Bear
$51.15
Fair
$73.07
Bull
$94.99
Bear
$51.15
+517.0%
ROTCE 4.0% → 0.30x TBV
Fair
$73.07
+781.4%
ROTCE -36.6% → 0.30x TBV
Bull
$94.99
+1045.9%
ROTCE -42.0% → 0.30x TBV
Key Value Driver
ROTCE (-36.6%) vs. cost of equity (9.1%)
Implied Market Multiple
0.56x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $14.00 from 6 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $73.07 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 (-36.6%) is below the minimum investors require (9.1%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $14.00 (from 6 analysts). Our estimate is 527% above 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