LPRO
Open Lending Corporation
$2.11
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 79.7% below fair value
You pay
$2.11
Bear
$7.28
Fair
$10.40
Bull
$13.52
Bear
$7.28
+245.0%
ROTCE 4.0% → 0.30x TBV
Fair
$10.40
+392.9%
ROTCE -6.0% → 0.30x TBV
Bull
$13.52
+540.8%
ROTCE -6.9% → 0.30x TBV
Key Value Driver
ROTCE (-6.0%) vs. cost of equity (14.0%)
Implied Market Multiple
3.52x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $4.00 from 12 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $10.40 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 (-6.0%) 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 $4.00 (from 12 analysts). Our estimate is 200% above 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