KRNY
Kearny Financial Corp.
$9.06
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 40.1% above fair value
You pay
$9.06
Bear
$4.53
Fair
$6.47
Bull
$8.41
Bear
$4.53
-50.0%
ROTCE 4.2% → 0.30x TBV
Fair
$6.47
-28.6%
ROTCE 5.6% → 0.42x TBV
Bull
$8.41
-7.2%
ROTCE 6.4% → 0.64x TBV
Adjust Assumptions
5.6%
7.7%
Key Value Driver
ROTCE (5.6%) vs. cost of equity (7.7%)
Implied Market Multiple
0.88x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (5 analysts)
$10.75
Divergence from AlphaVal
40%
Summary
With ROTCE of 5.6% vs. 7.7% cost of equity, fair P/TBV is 0.42x on $10.32 tangible book, implying $6.47 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 (5.6%) is below the minimum investors require (7.7%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $10.75 (from 5 analysts). Our estimate is 40% 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