ORI
Old Republic International Corporation
$39.35
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 42.1% below fair value
You pay
$39.35
Bear
$45.99
Fair
$67.91
Bull
$79.13
Bear
$45.99
+16.9%
ROTCE 13.3% → 2.32x TBV
Fair
$67.91
+72.6%
ROTCE 17.7% → 3.43x TBV
Bull
$79.13
+101.1%
ROTCE 20.4% → 4.00x TBV
Key Value Driver
ROTCE (17.7%) vs. cost of equity (8.0%)
Implied Market Multiple
1.82x
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 $67.91 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 77% 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