RITM
Rithm Capital Corp.
$9.12
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 42.4% below fair value
You pay
$9.12
Bear
$11.09
Fair
$15.83
Bull
$20.58
Bear
$11.09
+21.6%
ROTCE 6.1% → 0.32x TBV
Fair
$15.83
+73.6%
ROTCE 8.1% → 0.63x TBV
Bull
$20.58
+125.7%
ROTCE 9.3% → 0.82x TBV
Key Value Driver
ROTCE (8.1%) vs. cost of equity (10.5%)
Implied Market Multiple
0.6x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $13.50 from 19 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $15.83 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.
Return on equity (8.1%) is below the minimum investors require (10.5%). This means the bank is worth less than the net assets on its books.
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