NAVI
Navient Corporation
$8.44
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 71.5% below fair value
You pay
$8.44
Bear
$20.72
Fair
$29.60
Bull
$38.47
Bear
$20.72
+145.5%
ROTCE 4.0% → 0.30x TBV
Fair
$29.60
+250.7%
ROTCE -4.1% → 0.30x TBV
Bull
$38.47
+355.8%
ROTCE -4.7% → 0.30x TBV
Key Value Driver
ROTCE (-4.1%) vs. cost of equity (11.2%)
Implied Market Multiple
0.4x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $8.67 from 24 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $29.60 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.
Return on equity (-4.1%) is below the minimum investors require (11.2%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $8.67 (from 24 analysts). Our estimate is 322% 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