SLM
SLM Corporation
$23.66
Banks, Insurers & Asset Managers
80%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 51.0% below fair value
You pay
$23.66
Bear
$36.19
Fair
$48.24
Bull
$62.71
Bear
$36.19
+53.0%
ROTCE 20.0% → 2.84x TBV
Fair
$48.24
+103.9%
ROTCE 25.0% → 3.73x TBV
Bull
$62.71
+165.1%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
31.1%
9.6%
Key Value Driver
ROTCE (31.1%) vs. cost of equity (9.6%)
Implied Market Multiple
1.86x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (25 analysts)
$28.75
Divergence from AlphaVal
68%
Summary
With ROTCE of 31.1% vs. 9.6% cost of equity, fair P/TBV is 3.73x on $12.72 tangible book, implying $48.24 per share. DDM cross-check: $8.64.
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: $8.64 (82% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $28.75 (from 25 analysts). Our estimate is 68% 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