BNY
Bank of New York Mellon Corp
$162.50
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 48.3% above fair value
You pay
$162.50
Bear
$76.23
Fair
$109.56
Bull
$129.56
Bear
$76.23
-53.1%
ROTCE 16.8% → 2.12x TBV
Fair
$109.56
-32.6%
ROTCE 22.4% → 3.04x TBV
Bull
$129.56
-20.3%
ROTCE 25.8% → 3.60x TBV
Adjust Assumptions
22.4%
10.1%
Key Value Driver
ROTCE (22.4%) vs. cost of equity (10.1%)
Implied Market Multiple
4.51x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (22 analysts)
$168.50
Divergence from AlphaVal
35%
Summary
With ROTCE of 22.4% vs. 10.1% cost of equity, fair P/TBV is 3.04x on $36.02 tangible book, implying $109.56 per share. DDM cross-check: $985.06.
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: $985.06 (799% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $168.50 (from 22 analysts). Our estimate is 35% 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