TFSL
TFS Financial Corporation
$17.33
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 458.7% above fair value
You pay
$17.33
Bear
$2.17
Fair
$3.10
Bull
$4.03
Bear
$2.17
-87.5%
ROTCE 4.0% → 0.30x TBV
Fair
$3.10
-82.1%
ROTCE 4.8% → 0.30x TBV
Bull
$4.03
-76.7%
ROTCE 5.6% → 0.37x TBV
Adjust Assumptions
4.8%
8.3%
Key Value Driver
ROTCE (4.8%) vs. cost of equity (8.3%)
Implied Market Multiple
2.59x
Summary
With ROTCE of 4.8% vs. 8.3% cost of equity, fair P/TBV is 0.30x on $6.69 tangible book, implying $3.10 per share. DDM cross-check: $15.32.
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 (4.8%) is below the minimum investors require (8.3%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $15.32 (394% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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