ROOT
Root, Inc.
$57.70
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 216.6% above fair value
You pay
$57.70
Bear
$11.04
Fair
$18.23
Bull
$22.54
Bear
$11.04
-80.9%
ROTCE 8.2% → 0.42x TBV
Fair
$18.23
-68.4%
ROTCE 10.9% → 0.69x TBV
Bull
$22.54
-60.9%
ROTCE 12.6% → 0.86x TBV
Adjust Assumptions
10.9%
14.0%
Key Value Driver
ROTCE (10.9%) vs. cost of equity (14.0%)
Implied Market Multiple
2.19x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (14 analysts)
$54.00
Divergence from AlphaVal
66%
Summary
With ROTCE of 10.9% vs. 14.0% cost of equity, fair P/TBV is 0.69x on $26.30 tangible book, implying $18.23 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 $54.00 (from 14 analysts). Our estimate is 66% 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