ARES
Ares Management Corporation
$114.32
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 112.4% above fair value
You pay
$114.32
Bear
$37.67
Fair
$53.82
Bull
$69.97
Bear
$37.67
-67.0%
ROTCE 9.3% → 0.59x TBV
Fair
$53.82
-52.9%
ROTCE 12.3% → 0.94x TBV
Bull
$69.97
-38.8%
ROTCE 14.2% → 1.15x TBV
Adjust Assumptions
12.3%
12.8%
Key Value Driver
ROTCE (12.3%) vs. cost of equity (12.8%)
Implied Market Multiple
8.78x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (22 analysts)
$147.75
Divergence from AlphaVal
64%
Summary
With ROTCE of 12.3% vs. 12.8% cost of equity, fair P/TBV is 0.94x on $13.02 tangible book, implying $53.82 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 (12.3%) is below the minimum investors require (12.8%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $147.75 (from 22 analysts). Our estimate is 64% 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