MBIN
Merchants Bancorp
$45.99
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 12.9% below fair value
You pay
$45.99
Bear
$36.95
Fair
$52.79
Bull
$68.63
Bear
$36.95
-19.7%
ROTCE 7.2% → 0.48x TBV
Fair
$52.79
+14.8%
ROTCE 9.6% → 0.84x TBV
Bull
$68.63
+49.2%
ROTCE 11.1% → 1.05x TBV
Key Value Driver
ROTCE (9.6%) vs. cost of equity (10.7%)
Implied Market Multiple
0.93x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $54.50 from 7 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $52.79 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 (10.7%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $8.67 (83% 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