MORN
Morningstar, Inc.
$169.41
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 14.2% above fair value
You pay
$169.41
Bear
$101.59
Fair
$148.29
Bull
$148.29
Bear
$101.59
-40.0%
ROTCE 20.0% → 2.74x TBV
Fair
$148.29
-12.5%
ROTCE 25.0% → 4.00x TBV
Bull
$148.29
-12.5%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (30.6%) vs. cost of equity (9.8%)
Implied Market Multiple
5.27x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $227.33 from 6 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $148.29 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: $70.08 (45% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $227.33 (from 6 analysts). Our estimate is 43% 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