CFFN
Capitol Federal Financial, Inc.
$7.75
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 20.8% above fair value
You pay
$7.75
Bear
$4.49
Fair
$6.42
Bull
$8.34
Bear
$4.49
-42.0%
ROTCE 4.9% → 0.30x TBV
Fair
$6.42
-17.2%
ROTCE 6.5% → 0.62x TBV
Bull
$8.34
+7.6%
ROTCE 7.5% → 0.86x TBV
Key Value Driver
ROTCE (6.5%) vs. cost of equity (8.0%)
Implied Market Multiple
0.94x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $7.00 from 5 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $6.42 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.
Return on equity (6.5%) is below the minimum investors require (8.0%). This means the bank is worth less than the net assets on its books.
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