PGR
The Progressive Corporation
$229.25
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 17.8% above fair value
Bear
$194.66
-15.1%
ROTCE 20.0% → 4.00x TBV
Fair
$194.66
-15.1%
ROTCE 25.0% → 4.00x TBV
Bull
$194.66
-15.1%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
40.0%
6.0%
Key Value Driver
ROTCE (40.0%) vs. cost of equity (6.0%)
Implied Market Multiple
4.71x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (42 analysts)
$222.92
Divergence from AlphaVal
13%
Summary
With ROTCE of 40.0% vs. 6.0% cost of equity, fair P/TBV is 4.00x on $48.66 tangible book, implying $194.66 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