DFIN
Donnelley Financial Solutions, Inc.
$39.00
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 36.4% below fair value
You pay
$39.00
Bear
$42.95
Fair
$61.36
Bull
$79.77
Bear
$42.95
+10.1%
ROTCE 6.4% → 0.50x TBV
Fair
$61.36
+57.3%
ROTCE 8.5% → 0.94x TBV
Bull
$79.77
+104.5%
ROTCE 9.8% → 1.20x TBV
Key Value Driver
ROTCE (8.5%) vs. cost of equity (8.9%)
Implied Market Multiple
2.57x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $62.00 from 10 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $61.36 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 (8.5%) is below the minimum investors require (8.9%). 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