ONB
Old National Bancorp
$25.03
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 0.7% below fair value
You pay
$25.03
Bear
$17.64
Fair
$25.20
Bull
$32.76
Bear
$17.64
-29.5%
ROTCE 9.0% → 0.99x TBV
Fair
$25.20
+0.7%
ROTCE 12.0% → 1.58x TBV
Bull
$32.76
+30.9%
ROTCE 13.8% → 1.94x TBV
Adjust Assumptions
12.0%
9.0%
Key Value Driver
ROTCE (12.0%) vs. cost of equity (9.0%)
Implied Market Multiple
1.71x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (23 analysts)
$29.63
Divergence from AlphaVal
15%
Summary
With ROTCE of 12.0% vs. 9.0% cost of equity, fair P/TBV is 1.58x on $14.60 tangible book, implying $25.20 per share. DDM cross-check: $6.80.
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: $6.80 (73% 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