MRSH
Marsh & McLennan Companies, Inc.
$191.06
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 15.3% above fair value
You pay
$191.06
Bear
$126.57
Fair
$165.66
Bull
$215.36
Bear
$126.57
-33.8%
ROTCE 20.0% → 4.00x TBV
Fair
$165.66
-13.3%
ROTCE 25.0% → 4.00x TBV
Bull
$215.36
+12.7%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
27.5%
7.5%
Key Value Driver
ROTCE (27.5%) vs. cost of equity (7.5%)
Implied Market Multiple
6.04x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (34 analysts)
$202.71
Divergence from AlphaVal
18%
Summary
With ROTCE of 27.5% vs. 7.5% cost of equity, fair P/TBV is 4.00x on $31.64 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