ONIT
Onity Group Inc.
$27.17
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 85.2% below fair value
You pay
$27.17
Bear
$140.00
Fair
$183.75
Bull
$227.50
Bear
$140.00
+415.3%
ROTCE 20.0% → 1.88x TBV
Fair
$183.75
+576.3%
ROTCE 25.0% → 2.47x TBV
Bull
$227.50
+737.3%
ROTCE 30.0% → 3.05x TBV
Adjust Assumptions
30.2%
12.5%
Key Value Driver
ROTCE (30.2%) vs. cost of equity (12.5%)
Implied Market Multiple
0.36x
Summary
With ROTCE of 30.2% vs. 12.5% cost of equity, fair P/TBV is 2.47x on $74.48 tangible book, implying $183.75 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