LC
LendingClub Corporation
$19.21
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 180.5% above fair value
You pay
$19.21
Bear
$3.91
Fair
$6.85
Bull
$8.61
Bear
$3.91
-79.7%
ROTCE 7.2% → 0.32x TBV
Fair
$6.85
-64.4%
ROTCE 9.6% → 0.56x TBV
Bull
$8.61
-55.2%
ROTCE 11.0% → 0.70x TBV
Adjust Assumptions
9.6%
14.0%
Key Value Driver
ROTCE (9.6%) vs. cost of equity (14.0%)
Implied Market Multiple
1.56x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (25 analysts)
$22.50
Divergence from AlphaVal
70%
Summary
With ROTCE of 9.6% vs. 14.0% cost of equity, fair P/TBV is 0.56x on $12.29 tangible book, implying $6.85 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 (9.6%) is below the minimum investors require (14.0%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $22.50 (from 25 analysts). Our estimate is 70% 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