FSK
FS KKR Capital Corp.
$10.78
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 77.0% below fair value
You pay
$10.78
Bear
$32.79
Fair
$46.84
Bull
$60.89
Bear
$32.79
+204.2%
ROTCE 4.0% → 0.30x TBV
Fair
$46.84
+334.5%
ROTCE 0.2% → 0.30x TBV
Bull
$60.89
+464.9%
ROTCE 0.2% → 0.30x TBV
Key Value Driver
ROTCE (0.2%) vs. cost of equity (9.3%)
Implied Market Multiple
0.52x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $11.00 from 13 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $46.84 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 (0.2%) is below the minimum investors require (9.3%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $30.04 (46% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $11.00 (from 13 analysts). Our estimate is 407% 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