ROOT
Root, Inc.
$57.38
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 45.7% above fair value
You pay
$57.38
Bear
$27.57
Fair
$39.38
Bull
$51.19
Bear
$27.57
-52.0%
ROTCE 8.2% → 0.42x TBV
Fair
$39.38
-31.4%
ROTCE 10.9% → 0.69x TBV
Bull
$51.19
-10.8%
ROTCE 12.6% → 0.86x TBV
Key Value Driver
ROTCE (10.9%) vs. cost of equity (14.0%)
Implied Market Multiple
2.18x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $62.50 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $39.38 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 (10.9%) is below the minimum investors require (14.0%). This means the bank is worth less than the net assets on its books.
Wall Street's average price target is $62.50 (from 14 analysts). Our estimate is 46% below 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