BGC
BGC Group, Inc
$12.17
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 87.2% above fair value
You pay
$12.17
Bear
$4.55
Fair
$6.50
Bull
$8.45
Bear
$4.55
-62.6%
ROTCE 12.0% → 1.43x TBV
Fair
$6.50
-46.6%
ROTCE 15.9% → 2.15x TBV
Bull
$8.45
-30.6%
ROTCE 18.3% → 2.58x TBV
Adjust Assumptions
15.9%
9.6%
Key Value Driver
ROTCE (15.9%) vs. cost of equity (9.6%)
Implied Market Multiple
5.93x
Summary
With ROTCE of 15.9% vs. 9.6% cost of equity, fair P/TBV is 2.15x 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