ECPG
Encore Capital Group, Inc.
$80.20
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 44.4% below fair value
You pay
$80.20
Bear
$101.03
Fair
$144.34
Bull
$187.65
Bear
$101.03
+26.0%
ROTCE 20.0% → 2.10x TBV
Fair
$144.34
+80.0%
ROTCE 25.0% → 4.00x TBV
Bull
$187.65
+134.0%
ROTCE 30.0% → 3.41x TBV
Key Value Driver
ROTCE (58.3%) vs. cost of equity (11.6%)
Implied Market Multiple
3.9x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $85.00 from 15 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $144.34 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.
Wall Street's average price target is $85.00 (from 15 analysts). Our estimate is 93% above 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