NAVI
Navient Corporation
$9.47
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 73.4% below fair value
You pay
$9.47
Bear
$24.93
Fair
$35.61
Bull
$46.29
Bear
$24.93
+163.2%
ROTCE 4.0% → 0.30x TBV
Fair
$35.61
+276.0%
ROTCE -4.1% → 0.30x TBV
Bull
$46.29
+388.8%
ROTCE -4.7% → 0.30x TBV
Adjust Assumptions
-4.1%
10.9%
Key Value Driver
ROTCE (-4.1%) vs. cost of equity (10.9%)
Implied Market Multiple
0.45x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (24 analysts)
$8.50
Divergence from AlphaVal
319%
Summary
With ROTCE of -4.1% vs. 10.9% cost of equity, fair P/TBV is 0.30x on $20.91 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 (10.9%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $8.50 (from 24 analysts). Our estimate is 319% 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