ONIT
Onity Group Inc.
$39.48
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 83.4% below fair value
You pay
$39.48
Bear
$145.45
Fair
$237.95
Bull
$236.36
Bear
$145.45
+268.4%
ROTCE 20.0% → 1.95x TBV
Fair
$237.95
+502.7%
ROTCE 25.0% → 3.20x TBV
Bull
$236.36
+498.7%
ROTCE 30.0% → 3.17x TBV
Key Value Driver
ROTCE (30.2%) vs. cost of equity (12.2%)
Implied Market Multiple
0.53x
Summary
With ROTCE of 30.2% vs. 12.2% cost of equity, fair P/TBV is 3.20x on $74.48 tangible book, implying $237.95 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