XP
XP Inc.
$19.99
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 45.4% below fair value
You pay
$19.99
Bear
$25.61
Fair
$36.58
Bull
$47.56
Bear
$25.61
+28.1%
ROTCE 18.3% → 2.24x TBV
Fair
$36.58
+83.0%
ROTCE 24.4% → 3.20x TBV
Bull
$47.56
+137.9%
ROTCE 28.0% → 3.77x TBV
Adjust Assumptions
24.4%
10.4%
Key Value Driver
ROTCE (24.4%) vs. cost of equity (10.4%)
Implied Market Multiple
2.56x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (10 analysts)
$24.57
Divergence from AlphaVal
49%
Summary
With ROTCE of 24.4% vs. 10.4% cost of equity, fair P/TBV is 3.20x on $7.81 tangible book, implying $36.58 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 10 analysts). Our estimate is 49% above the consensus -- consider that gap carefully.
Financial statements were converted from BRL into USD using USDBRL at 0.1965 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