PRU
Prudential Financial, Inc.
$104.12
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 38.6% below fair value
You pay
$104.12
Bear
$118.65
Fair
$169.49
Bull
$220.34
Bear
$118.65
+14.0%
ROTCE 20.0% → 3.21x TBV
Fair
$169.49
+62.8%
ROTCE 25.0% → 4.00x TBV
Bull
$220.34
+111.6%
ROTCE 30.0% → 4.00x TBV
Key Value Driver
ROTCE (39.6%) vs. cost of equity (9.0%)
Implied Market Multiple
4.0x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $101.38 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $169.49 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: $98.08 (51% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $101.38 (from 37 analysts). Our estimate is 96% 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