JEF
Jefferies Financial Group Inc.
$43.60
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 43.9% below fair value
You pay
$43.60
Bear
$54.42
Fair
$77.74
Bull
$101.06
Bear
$54.42
+24.8%
ROTCE 6.2% → 0.30x TBV
Fair
$77.74
+78.3%
ROTCE 8.3% → 0.49x TBV
Bull
$101.06
+131.8%
ROTCE 9.6% → 0.63x TBV
Adjust Assumptions
8.3%
12.8%
Key Value Driver
ROTCE (8.3%) vs. cost of equity (12.8%)
Implied Market Multiple
1.04x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (9 analysts)
$58.17
Divergence from AlphaVal
34%
Summary
With ROTCE of 8.3% vs. 12.8% cost of equity, fair P/TBV is 0.49x on $41.96 tangible book, implying $77.74 per share. DDM cross-check: $24.67.
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 (12.8%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $24.67 (68% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $58.17 (from 9 analysts). Our estimate is 34% 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