BK
The Bank of New York Mellon Corporation
$141.91
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 28.6% above fair value
You pay
$141.91
Bear
$76.79
Fair
$110.36
Bull
$130.50
Bear
$76.79
-45.9%
ROTCE 16.8% → 2.13x TBV
Fair
$110.36
-22.2%
ROTCE 22.4% → 3.06x TBV
Bull
$130.50
-8.0%
ROTCE 25.8% → 3.62x TBV
Adjust Assumptions
22.4%
10.0%
Key Value Driver
ROTCE (22.4%) vs. cost of equity (10.0%)
Implied Market Multiple
3.94x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (29 analysts)
$133.50
Divergence from AlphaVal
17%
Summary
With ROTCE of 22.4% vs. 10.0% cost of equity, fair P/TBV is 3.06x on $36.02 tangible book, implying $110.36 per share. DDM cross-check: $1198.05.
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.
Dividend-based valuation: $1198.05 (986% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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