MTG
MGIC Investment Corporation
$26.00
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 50.5% below fair value
You pay
$26.00
Bear
$34.30
Fair
$52.47
Bull
$63.39
Bear
$34.30
+31.9%
ROTCE 10.8% → 1.62x TBV
Fair
$52.47
+101.8%
ROTCE 14.4% → 2.48x TBV
Bull
$63.39
+143.8%
ROTCE 16.5% → 3.00x TBV
Key Value Driver
ROTCE (14.4%) vs. cost of equity (8.2%)
Implied Market Multiple
1.07x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $29.00 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $52.47 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.
Wall Street's average price target is $29.00 (from 22 analysts). Our estimate is 108% above 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