ONB
Old National Bancorp
$25.66
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 1.8% above fair value
You pay
$25.66
Bear
$17.64
Fair
$25.20
Bull
$32.76
Bear
$17.64
-31.3%
ROTCE 9.0% → 1.02x TBV
Fair
$25.20
-1.8%
ROTCE 12.0% → 1.64x TBV
Bull
$32.76
+27.7%
ROTCE 13.8% → 2.01x TBV
Adjust Assumptions
12.0%
8.9%
Key Value Driver
ROTCE (12.0%) vs. cost of equity (8.9%)
Implied Market Multiple
1.76x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (22 analysts)
$29.86
Divergence from AlphaVal
16%
Summary
With ROTCE of 12.0% vs. 8.9% cost of equity, fair P/TBV is 1.64x on $14.60 tangible book, implying $25.20 per share. DDM cross-check: $6.94.
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: $6.94 (72% 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