BGC
BGC Group, Inc
$11.35
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 74.6% above fair value
You pay
$11.35
Bear
$4.55
Fair
$6.50
Bull
$8.45
Bear
$4.55
-59.9%
ROTCE 12.0% → 1.39x TBV
Fair
$6.50
-42.7%
ROTCE 15.9% → 2.09x TBV
Bull
$8.45
-25.6%
ROTCE 18.3% → 2.50x TBV
Adjust Assumptions
15.9%
9.7%
Key Value Driver
ROTCE (15.9%) vs. cost of equity (9.7%)
Implied Market Multiple
5.44x
Summary
With ROTCE of 15.9% vs. 9.7% cost of equity, fair P/TBV is 2.09x on $2.09 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