ORI
Old Republic International Corporation
$41.73
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 41.8% below fair value
You pay
$41.73
Bear
$48.58
Fair
$71.74
Bull
$78.54
Bear
$48.58
+16.4%
ROTCE 13.3% → 2.47x TBV
Fair
$71.74
+71.9%
ROTCE 17.7% → 3.65x TBV
Bull
$78.54
+88.2%
ROTCE 20.4% → 4.00x TBV
Key Value Driver
ROTCE (17.7%) vs. cost of equity (7.8%)
Implied Market Multiple
1.93x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $42.00 from 5 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $71.74 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.
Wall Street's average price target is $42.00 (from 5 analysts). Our estimate is 89% above the consensus -- consider that gap carefully.
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