MTG
MGIC Investment Corporation
$27.85
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 57.4% below fair value
You pay
$27.85
Bear
$42.77
Fair
$65.45
Bull
$79.05
Bear
$42.77
+53.6%
ROTCE 10.8% → 1.71x TBV
Fair
$65.45
+135.0%
ROTCE 14.4% → 2.61x TBV
Bull
$79.05
+183.9%
ROTCE 16.5% → 3.16x TBV
Adjust Assumptions
14.4%
8.0%
Key Value Driver
ROTCE (14.4%) vs. cost of equity (8.0%)
Implied Market Multiple
1.11x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (22 analysts)
$31.50
Divergence from AlphaVal
108%
Summary
With ROTCE of 14.4% vs. 8.0% cost of equity, fair P/TBV is 2.61x on $25.05 tangible book, implying $65.45 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 $31.50 (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