MMC
Marsh & McLennan Companies, Inc.
$182.70
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 4.9% above fair value
You pay
$182.70
Bear
$121.86
Fair
$174.09
Bull
$226.33
Bear
$121.86
-33.3%
ROTCE 20.0% → 3.61x TBV
Fair
$174.09
-4.7%
ROTCE 25.0% → 4.00x TBV
Bull
$226.33
+23.9%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (718.5%) vs. cost of equity (8.4%)
Implied Market Multiple
155.13x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $199.40 from 26 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $174.09 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