Merchants Bancorp

AI-generated fair value estimate for this company.

Method: Justified price-to-tangible-book model: normalized ROTCE of 15% (midpoint between FY2025's depressed 10.49% and FY2024's 20.16%, consistent with analyst FY2026 EPS rebound estimate of +33.9%), cost of equity 10.5%, terminal growth 4% -> justified P/TBV = (0.15-0.04)/(0.105-0.04) = 1.69x; applied to tangible book value per share of $37.51 (FY2025-end) x 45.94M shares

Reasoning: Merchants Bancorp's FY2025 net income fell 32% YoY on margin compression and a higher efficiency ratio, but this looks like a cyclical dip rather than a structural problem given the bank's historically strong ROTCE and analyst estimates calling for a sharp FY2026 EPS rebound. DCF/justified-P/TBV value of ~$2.92B is above the ~$2.39B market cap, consistent with the bank trading at only 10.46x trailing earnings on a depressed base year