MBIN
Merchants Bancorp
$49.20
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 6.0% below fair value
You pay
$49.20
Bear
$36.65
Fair
$52.36
Bull
$68.07
Bear
$36.65
-25.5%
ROTCE 7.2% → 0.46x TBV
Fair
$52.36
+6.4%
ROTCE 9.6% → 0.81x TBV
Bull
$68.07
+38.3%
ROTCE 11.1% → 1.01x TBV
Adjust Assumptions
9.6%
11.0%
Key Value Driver
ROTCE (9.6%) vs. cost of equity (11.0%)
Implied Market Multiple
0.99x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (7 analysts)
$59.67
Divergence from AlphaVal
12%
Summary
With ROTCE of 9.6% vs. 11.0% cost of equity, fair P/TBV is 0.81x on $49.47 tangible book, implying $52.36 per share. DDM cross-check: $13.18.
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 (11.0%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $13.18 (75% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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