JEF
Jefferies Financial Group Inc.
$55.23
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 29.0% below fair value
You pay
$55.23
Bear
$54.42
Fair
$77.74
Bull
$101.06
Bear
$54.42
-1.5%
ROTCE 6.2% → 0.30x TBV
Fair
$77.74
+40.8%
ROTCE 8.3% → 0.51x TBV
Bull
$101.06
+83.0%
ROTCE 9.6% → 0.65x TBV
Adjust Assumptions
8.3%
12.6%
Key Value Driver
ROTCE (8.3%) vs. cost of equity (12.6%)
Implied Market Multiple
1.32x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (9 analysts)
$62.40
Divergence from AlphaVal
25%
Summary
With ROTCE of 8.3% vs. 12.6% cost of equity, fair P/TBV is 0.51x on $41.96 tangible book, implying $77.74 per share. DDM cross-check: $29.84.
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 (8.3%) is below the minimum investors require (12.6%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $29.84 (62% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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