XP
XP Inc.
$16.75
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 51.1% below fair value
You pay
$16.75
Bear
$23.99
Fair
$34.27
Bull
$44.57
Bear
$23.99
+43.2%
ROTCE 18.3% → 2.21x TBV
Fair
$34.27
+104.6%
ROTCE 24.4% → 3.15x TBV
Bull
$44.57
+166.0%
ROTCE 28.0% → 3.72x TBV
Key Value Driver
ROTCE (24.4%) vs. cost of equity (10.5%)
Implied Market Multiple
2.14x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $24.57 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $34.27 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.
Wall Street's average price target is $24.57 (from 9 analysts). Our estimate is 49% above the consensus -- consider that gap carefully.
Financial statements were converted from BRL into USD using USDBRL at 0.1972 USD per BRL.
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