GS
The Goldman Sachs Group, Inc.
$942.00
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 10.6% below fair value
You pay
$942.00
Bear
$737.83
Fair
$1,054.04
Bull
$1,370.25
Bear
$737.83
-21.7%
ROTCE 10.9% → 0.94x TBV
Fair
$1,054.04
+11.9%
ROTCE 14.5% → 1.43x TBV
Bull
$1,370.25
+45.5%
ROTCE 16.7% → 1.73x TBV
Adjust Assumptions
14.5%
11.4%
Key Value Driver
ROTCE (14.5%) vs. cost of equity (11.4%)
Implied Market Multiple
2.35x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (55 analysts)
$1202.33
Divergence from AlphaVal
12%
Summary
With ROTCE of 14.5% vs. 11.4% cost of equity, fair P/TBV is 1.43x on $400.60 tangible book, implying $1054.04 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.
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