EIG
Employers Holdings, Inc.
$43.90
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 29.8% below fair value
You pay
$43.90
Bear
$43.78
Fair
$62.55
Bull
$81.31
Bear
$43.78
-0.3%
ROTCE 4.0% → 0.30x TBV
Fair
$62.55
+42.5%
ROTCE 1.3% → 0.30x TBV
Bull
$81.31
+85.2%
ROTCE 1.5% → 0.30x TBV
Key Value Driver
ROTCE (1.3%) vs. cost of equity (7.0%)
Implied Market Multiple
1.14x
Summary
With ROTCE of 1.3% vs. 7.0% cost of equity, fair P/TBV is 0.30x on $38.36 tangible book, implying $62.55 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 (1.3%) is below the minimum investors require (7.0%). 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