TROW
T. Rowe Price Group, Inc.
$104.20
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 56.2% below fair value
You pay
$104.20
Bear
$166.53
Fair
$237.90
Bull
$309.27
Bear
$166.53
+59.8%
ROTCE 19.7% → 1.87x TBV
Fair
$237.90
+128.3%
ROTCE 25.0% → 2.50x TBV
Bull
$309.27
+196.8%
ROTCE 30.0% → 3.10x TBV
Adjust Assumptions
26.3%
12.4%
Key Value Driver
ROTCE (26.3%) vs. cost of equity (12.4%)
Implied Market Multiple
2.8x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (38 analysts)
$110.83
Divergence from AlphaVal
115%
Summary
With ROTCE of 26.3% vs. 12.4% cost of equity, fair P/TBV is 2.50x on $37.24 tangible book, implying $237.90 per share. DDM cross-check: $50.81.
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: $50.81 (79% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $110.83 (from 38 analysts). Our estimate is 115% 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