LPLA
LPL Financial Holdings Inc.
$285.78
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 11.6% below fair value
You pay
$285.78
Bear
$226.23
Fair
$323.19
Bull
$420.15
Bear
$226.23
-20.8%
ROTCE 12.1% → 2.34x TBV
Fair
$323.19
+13.1%
ROTCE 16.1% → 3.50x TBV
Bull
$420.15
+47.0%
ROTCE 18.6% → 4.00x TBV
Key Value Driver
ROTCE (16.1%) vs. cost of equity (7.5%)
Implied Market Multiple
4.28x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $441.00 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $323.19 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.
Dividend-based valuation: $33.10 (88% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $441.00 (from 22 analysts). Our estimate is 36% 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