LPLA
LPL Financial Holdings Inc.
$329.12
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 1.9% above fair value
You pay
$329.12
Bear
$226.01
Fair
$322.88
Bull
$419.75
Bear
$226.01
-31.3%
ROTCE 12.1% → 2.63x TBV
Fair
$322.88
-1.9%
ROTCE 16.1% → 3.93x TBV
Bull
$419.75
+27.5%
ROTCE 18.6% → 4.00x TBV
Key Value Driver
ROTCE (16.1%) vs. cost of equity (7.1%)
Implied Market Multiple
4.93x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $439.75 from 25 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $322.88 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: $36.88 (87% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $439.75 (from 25 analysts). Our estimate is 35% 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