ALRS
Alerus Financial Corporation
$30.68
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 59.0% above fair value
You pay
$30.68
Bear
$13.51
Fair
$19.30
Bull
$25.08
Bear
$13.51
-56.0%
ROTCE 4.0% → 0.30x TBV
Fair
$19.30
-37.1%
ROTCE 3.9% → 0.30x TBV
Bull
$25.08
-18.2%
ROTCE 4.5% → 0.30x TBV
Adjust Assumptions
3.9%
8.2%
Key Value Driver
ROTCE (3.9%) vs. cost of equity (8.2%)
Implied Market Multiple
1.73x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (5 analysts)
$37.00
Divergence from AlphaVal
48%
Summary
With ROTCE of 3.9% vs. 8.2% cost of equity, fair P/TBV is 0.30x on $17.75 tangible book, implying $19.30 per share. DDM cross-check: $26.76.
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 (8.2%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $26.76 (39% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $37.00 (from 5 analysts). Our estimate is 48% 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