MFIC
MidCap Financial Investment Corporation
$10.60
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 63.0% below fair value
You pay
$10.60
Bear
$20.03
Fair
$28.62
Bull
$37.20
Bear
$20.03
+88.9%
ROTCE 4.0% → 0.30x TBV
Fair
$28.62
+170.0%
ROTCE 4.8% → 0.30x TBV
Bull
$37.20
+251.0%
ROTCE 5.6% → 0.38x TBV
Key Value Driver
ROTCE (4.8%) vs. cost of equity (8.1%)
Implied Market Multiple
0.67x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $11.00 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $28.62 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 (4.8%) is below the minimum investors require (8.1%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $11.00 (from 14 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