ONIT
Onity Group Inc.
$34.37
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 84.3% below fair value
You pay
$34.37
Bear
$133.94
Fair
$219.13
Bull
$217.66
Bear
$133.94
+289.7%
ROTCE 20.0% → 1.80x TBV
Fair
$219.13
+537.5%
ROTCE 25.0% → 2.94x TBV
Bull
$217.66
+533.3%
ROTCE 30.0% → 2.92x TBV
Key Value Driver
ROTCE (30.2%) vs. cost of equity (12.9%)
Implied Market Multiple
0.46x
Summary
With ROTCE of 30.2% vs. 12.9% cost of equity, fair P/TBV is 2.94x on $74.48 tangible book, implying $219.13 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.
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