PFG
Principal Financial Group, Inc.
$103.85
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 6.9% below fair value
You pay
$103.85
Bear
$78.10
Fair
$111.56
Bull
$145.03
Bear
$78.10
-24.8%
ROTCE 18.0% → 2.67x TBV
Fair
$111.56
+7.4%
ROTCE 24.0% → 3.82x TBV
Bull
$145.03
+39.7%
ROTCE 27.6% → 4.00x TBV
Key Value Driver
ROTCE (24.0%) vs. cost of equity (9.2%)
Implied Market Multiple
4.54x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $98.86 from 25 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $111.56 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.
Dividend-based valuation: $71.70 (38% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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