ONB
Old National Bancorp
$26.49
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 1.0% above fair value
You pay
$26.49
Bear
$18.36
Fair
$26.23
Bull
$34.10
Bear
$18.36
-30.7%
ROTCE 9.0% → 1.02x TBV
Fair
$26.23
-1.0%
ROTCE 12.0% → 1.64x TBV
Bull
$34.10
+28.7%
ROTCE 13.8% → 2.01x TBV
Key Value Driver
ROTCE (12.0%) vs. cost of equity (8.9%)
Implied Market Multiple
1.83x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $29.33 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $26.23 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: $6.72 (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