KRNY
Kearny Financial Corp.
$8.20
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 10.2% above fair value
You pay
$8.20
Bear
$5.21
Fair
$7.44
Bull
$9.68
Bear
$5.21
-36.5%
ROTCE 4.0% → 0.30x TBV
Fair
$7.44
-9.2%
ROTCE 4.1% → 0.30x TBV
Bull
$9.68
+18.0%
ROTCE 4.8% → 0.30x TBV
Key Value Driver
ROTCE (4.1%) vs. cost of equity (7.8%)
Implied Market Multiple
0.82x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $9.50 from 5 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $7.44 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 (4.1%) is below the minimum investors require (7.8%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $9.50 (from 5 analysts). Our estimate is 27% below 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