MMC
Marsh & McLennan Companies, Inc.
$182.70
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 10.3% above fair value
You pay
$182.70
Bear
$115.96
Fair
$165.66
Bull
$215.36
Bear
$115.96
-36.5%
ROTCE 20.0% → 3.61x TBV
Fair
$165.66
-9.3%
ROTCE 25.0% → 4.00x TBV
Bull
$215.36
+17.9%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
27.5%
8.4%
Key Value Driver
ROTCE (27.5%) vs. cost of equity (8.4%)
Implied Market Multiple
5.95x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (26 analysts)
$199.40
Divergence from AlphaVal
17%
Summary
With ROTCE of 27.5% vs. 8.4% cost of equity, fair P/TBV is 4.00x on $30.71 tangible book, implying $165.66 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.
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