FLG
Flagstar Financial, Inc.
$11.32
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 35.4% below fair value
You pay
$11.32
Bear
$12.26
Fair
$17.51
Bull
$22.77
Bear
$12.26
+8.3%
ROTCE 4.0% → 0.30x TBV
Fair
$17.51
+54.7%
ROTCE -2.3% → 0.30x TBV
Bull
$22.77
+101.1%
ROTCE -2.6% → 0.30x TBV
Adjust Assumptions
-2.3%
10.1%
Key Value Driver
ROTCE (-2.3%) vs. cost of equity (10.1%)
Implied Market Multiple
0.61x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (15 analysts)
$16.81
Divergence from AlphaVal
4%
Summary
With ROTCE of -2.3% vs. 10.1% cost of equity, fair P/TBV is 0.30x on $18.62 tangible book, implying $17.51 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 (-2.3%) is below the minimum investors require (10.1%). 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