MORN
Morningstar, Inc.
$179.64
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 19.7% above fair value
You pay
$179.64
Bear
$105.03
Fair
$150.12
Bull
$150.12
Bear
$105.03
-41.5%
ROTCE 20.0% → 2.80x TBV
Fair
$150.12
-16.4%
ROTCE 25.0% → 4.00x TBV
Bull
$150.12
-16.4%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (30.6%) vs. cost of equity (9.7%)
Implied Market Multiple
5.59x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $236.50 from 6 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $150.12 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.
Dividend-based valuation: $72.97 (43% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $236.50 (from 6 analysts). Our estimate is 46% below 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