LC
LendingClub Corporation
$15.63
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 41.1% above fair value
You pay
$15.63
Bear
$7.75
Fair
$11.08
Bull
$14.39
Bear
$7.75
-50.4%
ROTCE 7.2% → 0.32x TBV
Fair
$11.08
-29.1%
ROTCE 9.6% → 0.56x TBV
Bull
$14.39
-7.9%
ROTCE 11.0% → 0.70x TBV
Key Value Driver
ROTCE (9.6%) vs. cost of equity (14.0%)
Implied Market Multiple
1.27x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $22.75 from 29 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $11.08 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 $22.75 (from 29 analysts). Our estimate is 68% 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