MBIN
Merchants Bancorp
$48.58
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 7.3% below fair value
You pay
$48.58
Bear
$36.69
Fair
$52.42
Bull
$68.15
Bear
$36.69
-24.5%
ROTCE 7.2% → 0.49x TBV
Fair
$52.42
+7.9%
ROTCE 9.6% → 0.85x TBV
Bull
$68.15
+40.3%
ROTCE 11.1% → 1.07x TBV
Key Value Driver
ROTCE (9.6%) vs. cost of equity (10.6%)
Implied Market Multiple
0.98x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $52.67 from 7 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $52.42 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 (10.6%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $8.84 (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