BNY
Bank of New York Mellon Corp
$147.18
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 34.7% above fair value
You pay
$147.18
Bear
$76.02
Fair
$109.26
Bull
$129.20
Bear
$76.02
-48.3%
ROTCE 16.8% → 2.11x TBV
Fair
$109.26
-25.8%
ROTCE 22.4% → 3.03x TBV
Bull
$129.20
-12.2%
ROTCE 25.8% → 3.59x TBV
Adjust Assumptions
22.4%
10.1%
Key Value Driver
ROTCE (22.4%) vs. cost of equity (10.1%)
Implied Market Multiple
4.09x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (22 analysts)
$166.00
Divergence from AlphaVal
34%
Summary
With ROTCE of 22.4% vs. 10.1% cost of equity, fair P/TBV is 3.03x on $36.02 tangible book, implying $109.26 per share. DDM cross-check: $30.63.
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: $30.63 (72% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $166.00 (from 22 analysts). Our estimate is 34% 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