PYPL
PayPal Holdings, Inc.
$42.90
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 40.9% below fair value
You pay
$42.90
Bear
$50.80
Fair
$72.57
Bull
$94.34
Bear
$50.80
+18.4%
ROTCE 20.0% → 2.09x TBV
Fair
$72.57
+69.2%
ROTCE 25.0% → 4.00x TBV
Bull
$94.34
+119.9%
ROTCE 30.0% → 3.40x TBV
Key Value Driver
ROTCE (57.0%) vs. cost of equity (11.6%)
Implied Market Multiple
4.12x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $50.45 from 70 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $72.57 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.
Wall Street's average price target is $50.45 (from 70 analysts). Our estimate is 67% 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