GNW
Genworth Financial, Inc.
$9.07
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 16.2% below fair value
You pay
$9.07
Bear
$7.58
Fair
$10.82
Bull
$14.07
Bear
$7.58
-16.5%
ROTCE 4.0% → 0.30x TBV
Fair
$10.82
+19.3%
ROTCE 3.2% → 0.30x TBV
Bull
$14.07
+55.1%
ROTCE 3.7% → 0.30x TBV
Key Value Driver
ROTCE (3.2%) vs. cost of equity (9.2%)
Implied Market Multiple
0.5x
Summary
With ROTCE of 3.2% vs. 9.2% cost of equity, fair P/TBV is 0.30x on $18.19 tangible book, implying $10.82 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 (3.2%) is below the minimum investors require (9.2%). 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