ECPG
Encore Capital Group, Inc.
$102.69
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 23.5% below fair value
You pay
$102.69
Bear
$94.00
Fair
$134.28
Bull
$174.56
Bear
$94.00
-8.5%
ROTCE 20.0% → 2.14x TBV
Fair
$134.28
+30.8%
ROTCE 25.0% → 2.80x TBV
Bull
$174.56
+70.0%
ROTCE 30.0% → 3.47x TBV
Adjust Assumptions
58.3%
11.5%
Key Value Driver
ROTCE (58.3%) vs. cost of equity (11.5%)
Implied Market Multiple
4.94x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (15 analysts)
$112.00
Divergence from AlphaVal
20%
Summary
With ROTCE of 58.3% vs. 11.5% cost of equity, fair P/TBV is 2.80x on $20.77 tangible book, implying $134.28 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