FLG
Flagstar Financial, Inc.
$13.85
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 65.2% below fair value
You pay
$13.85
Bear
$27.89
Fair
$39.84
Bull
$51.79
Bear
$27.89
+101.3%
ROTCE 4.0% → 0.30x TBV
Fair
$39.84
+187.6%
ROTCE -2.3% → 0.30x TBV
Bull
$51.79
+273.9%
ROTCE -2.6% → 0.30x TBV
Key Value Driver
ROTCE (-2.3%) vs. cost of equity (10.0%)
Implied Market Multiple
0.74x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $15.58 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $39.84 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 (10.0%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $15.58 (from 14 analysts). Our estimate is 195% 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