BGC
BGC Group, Inc
$10.98
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 68.9% above fair value
You pay
$10.98
Bear
$4.55
Fair
$6.50
Bull
$8.45
Bear
$4.55
-58.6%
ROTCE 12.0% → 1.45x TBV
Fair
$6.50
-40.8%
ROTCE 15.9% → 2.18x TBV
Bull
$8.45
-23.0%
ROTCE 18.3% → 2.61x TBV
Key Value Driver
ROTCE (15.9%) vs. cost of equity (9.5%)
Implied Market Multiple
5.36x
Summary
With ROTCE of 15.9% vs. 9.5% cost of equity, fair P/TBV is 2.18x on $2.05 tangible book, implying $6.50 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.
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