NAVI
Navient Corporation
$8.50
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 76.1% below fair value
You pay
$8.50
Bear
$24.93
Fair
$35.61
Bull
$46.29
Bear
$24.93
+193.3%
ROTCE 4.0% → 0.30x TBV
Fair
$35.61
+318.9%
ROTCE -4.1% → 0.30x TBV
Bull
$46.29
+444.6%
ROTCE -4.7% → 0.30x TBV
Adjust Assumptions
-4.1%
10.7%
Key Value Driver
ROTCE (-4.1%) vs. cost of equity (10.7%)
Implied Market Multiple
0.41x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (24 analysts)
$8.00
Divergence from AlphaVal
345%
Summary
With ROTCE of -4.1% vs. 10.7% cost of equity, fair P/TBV is 0.30x on $20.95 tangible book, implying $35.61 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 (10.7%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $8.00 (from 24 analysts). Our estimate is 345% 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