ALRS
Alerus Financial Corporation
$28.05
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 32.4% above fair value
You pay
$28.05
Bear
$14.83
Fair
$21.19
Bull
$27.54
Bear
$14.83
-47.1%
ROTCE 4.0% → 0.30x TBV
Fair
$21.19
-24.5%
ROTCE 3.9% → 0.30x TBV
Bull
$27.54
-1.8%
ROTCE 4.5% → 0.30x TBV
Key Value Driver
ROTCE (3.9%) vs. cost of equity (8.1%)
Implied Market Multiple
1.58x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $28.75 from 5 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $21.19 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.
Return on equity (3.9%) is below the minimum investors require (8.1%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $35.79 (85% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $28.75 (from 5 analysts). Our estimate is 33% below 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