NTRS
Northern Trust Corporation
$183.05
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 45.9% above fair value
You pay
$183.05
Bear
$87.84
Fair
$125.49
Bull
$163.14
Bear
$87.84
-52.0%
ROTCE 10.6% → 0.92x TBV
Fair
$125.49
-31.4%
ROTCE 14.2% → 1.41x TBV
Bull
$163.14
-10.9%
ROTCE 16.3% → 1.70x TBV
Key Value Driver
ROTCE (14.2%) vs. cost of equity (11.2%)
Implied Market Multiple
2.77x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $168.40 from 35 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $125.49 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.
Dividend-based valuation: $38.56 (64% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $168.40 (from 35 analysts). Our estimate is 36% below 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