OFG
OFG Bancorp
$52.71
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 39.3% below fair value
You pay
$52.71
Bear
$57.77
Fair
$86.81
Bull
$104.23
Bear
$57.77
+9.6%
ROTCE 11.9% → 1.88x TBV
Fair
$86.81
+64.7%
ROTCE 15.8% → 2.83x TBV
Bull
$104.23
+97.7%
ROTCE 18.2% → 3.40x TBV
Adjust Assumptions
15.8%
8.2%
Key Value Driver
ROTCE (15.8%) vs. cost of equity (8.2%)
Implied Market Multiple
1.72x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (12 analysts)
$56.33
Divergence from AlphaVal
54%
Summary
With ROTCE of 15.8% vs. 8.2% cost of equity, fair P/TBV is 2.83x on $30.66 tangible book, implying $86.81 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.
Wall Street's average price target is $56.33 (from 12 analysts). Our estimate is 54% 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