MS
Morgan Stanley
$189.71
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 8.2% below fair value
You pay
$189.71
Bear
$144.69
Fair
$206.70
Bull
$268.71
Bear
$144.69
-23.7%
ROTCE 14.2% → 1.47x TBV
Fair
$206.70
+9.0%
ROTCE 19.0% → 2.15x TBV
Bull
$268.71
+41.6%
ROTCE 21.8% → 2.55x TBV
Adjust Assumptions
19.0%
11.0%
Key Value Driver
ROTCE (19.0%) vs. cost of equity (11.0%)
Implied Market Multiple
3.37x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (52 analysts)
$229.25
Divergence from AlphaVal
10%
Summary
With ROTCE of 19.0% vs. 11.0% cost of equity, fair P/TBV is 2.15x on $56.36 tangible book, implying $206.70 per share. DDM cross-check: $132.93.
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: $132.93 (36% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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