ARES
Ares Management Corporation
$125.68
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 56.0% above fair value
You pay
$125.68
Bear
$56.38
Fair
$80.55
Bull
$104.72
Bear
$56.38
-55.1%
ROTCE 9.3% → 0.60x TBV
Fair
$80.55
-35.9%
ROTCE 12.3% → 0.95x TBV
Bull
$104.72
-16.7%
ROTCE 14.2% → 1.16x TBV
Key Value Driver
ROTCE (12.3%) vs. cost of equity (12.7%)
Implied Market Multiple
9.65x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $160.75 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $80.55 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 (12.7%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $160.75 (from 22 analysts). Our estimate is 67% 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