PRU
Prudential Financial, Inc.
$115.11
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Fair Value
Trading 14.7% below fair value
You pay
$115.11
Bear
$94.50
Fair
$135.00
Bull
$175.50
Bear
$94.50
-17.9%
ROTCE 20.0% → 3.25x TBV
Fair
$135.00
+17.3%
ROTCE 25.0% → 4.00x TBV
Bull
$175.50
+52.5%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
39.6%
8.9%
Key Value Driver
ROTCE (39.6%) vs. cost of equity (8.9%)
Implied Market Multiple
4.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (37 analysts)
$105.33
Divergence from AlphaVal
28%
Summary
With ROTCE of 39.6% vs. 8.9% cost of equity, fair P/TBV is 4.00x on $26.18 tangible book, implying $135.00 per share. DDM cross-check: $99.44.
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: $99.44 (26% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $105.33 (from 37 analysts). Our estimate is 28% 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