NTRS
Northern Trust Corporation
$165.54
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 10.8% below fair value
You pay
$165.54
Bear
$129.95
Fair
$185.64
Bull
$241.33
Bear
$129.95
-21.5%
ROTCE 10.6% → 0.92x TBV
Fair
$185.64
+12.1%
ROTCE 14.2% → 1.42x TBV
Bull
$241.33
+45.8%
ROTCE 16.3% → 1.71x TBV
Adjust Assumptions
14.2%
11.2%
Key Value Driver
ROTCE (14.2%) vs. cost of equity (11.2%)
Implied Market Multiple
2.47x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (35 analysts)
$184.71
Divergence from AlphaVal
1%
Summary
With ROTCE of 14.2% vs. 11.2% cost of equity, fair P/TBV is 1.42x on $66.93 tangible book, implying $185.64 per share. DDM cross-check: $40.44.
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.
Dividend-based valuation: $40.44 (78% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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