AON
Aon plc
$357.88
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 30.2% above fair value
You pay
$357.88
Bear
$192.35
Fair
$274.78
Bull
$357.21
Bear
$192.35
-46.3%
ROTCE 20.0% → 3.98x TBV
Fair
$274.78
-23.2%
ROTCE 25.0% → 4.00x TBV
Bull
$357.21
-0.2%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
39.5%
8.0%
Key Value Driver
ROTCE (39.5%) vs. cost of equity (8.0%)
Implied Market Multiple
8.12x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (38 analysts)
$408.71
Divergence from AlphaVal
33%
Summary
With ROTCE of 39.5% vs. 8.0% cost of equity, fair P/TBV is 4.00x on $44.09 tangible book, implying $274.78 per share. DDM cross-check: $2890.53.
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.
Dividend-based valuation: $2890.53 (952% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $408.71 (from 38 analysts). Our estimate is 33% below 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