DHIL
Diamond Hill Investment Group, Inc.
$174.99
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 57.0% below fair value
You pay
$174.99
Bear
$285.01
Fair
$407.16
Bull
$529.31
Bear
$285.01
+62.9%
ROTCE 20.0% → 3.62x TBV
Fair
$407.16
+132.7%
ROTCE 25.0% → 4.00x TBV
Bull
$529.31
+202.5%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (27.6%) vs. cost of equity (8.4%)
Implied Market Multiple
2.68x
Summary
With ROTCE of 27.6% vs. 8.4% cost of equity, fair P/TBV is 4.00x on $65.23 tangible book, implying $407.16 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.
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