Grupo Aval Acciones y Valores S.A.

AI-generated fair value estimate for this company.

Method: Justified Price/Book (Gordon Growth on ROE) model, chosen over DCF because AVAL is a bank/financial holding company. Inputs: ADS price ~$4.90, ~1.188B ADS-equivalent shares, book value per ADS of $3.96 (implying total equity ~$4.70B), TTM net income attributable to shareholders of ~$457.9M giving ROE of ~9.7%. Using a cost of equity of 13% (Colombia country/FX risk premium) and long-run growth of 4%: Justified P/B = (0.097-0.04)/(0.13-0.04) = 0.633x. Fair value per ADS = 0.633 x $3.96 = $2.51.

Reasoning: As a leveraged bank holding company, cash flows are not meaningfully free in the DCF sense (capital must be retained for regulatory purposes), so a residual-income/justified-P/B framework tied to ROE, cost of equity, and growth is the standard and more appropriate valuation tool for financial institutions. The elevated cost of equity reflects Colombian peso volatility, political/country risk, and EM bank risk premia.