PFG
Principal Financial Group, Inc.
$108.44
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 6.4% below fair value
You pay
$108.44
Bear
$81.06
Fair
$115.80
Bull
$150.54
Bear
$81.06
-25.2%
ROTCE 18.0% → 2.75x TBV
Fair
$115.80
+6.8%
ROTCE 24.0% → 3.92x TBV
Bull
$150.54
+38.8%
ROTCE 27.6% → 4.00x TBV
Adjust Assumptions
24.0%
9.1%
Key Value Driver
ROTCE (24.0%) vs. cost of equity (9.1%)
Implied Market Multiple
4.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (25 analysts)
$108.22
Divergence from AlphaVal
7%
Summary
With ROTCE of 24.0% vs. 9.1% cost of equity, fair P/TBV is 3.92x on $23.10 tangible book, implying $115.80 per share. DDM cross-check: $81.13.
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: $81.13 (30% 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