BAC-PB
Bank of America Corporation
$24.61
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 51.1% below fair value
You pay
$24.61
Bear
$35.22
Fair
$50.32
Bull
$65.41
Bear
$35.22
+43.1%
ROTCE 9.8% → 0.82x TBV
Fair
$50.32
+104.5%
ROTCE 13.0% → 1.29x TBV
Bull
$65.41
+165.8%
ROTCE 15.0% → 1.57x TBV
Key Value Driver
ROTCE (13.0%) vs. cost of equity (11.0%)
Implied Market Multiple
1.47x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $40.00 from 39 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $50.32 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 $40.00 (from 39 analysts). Our estimate is 37% above 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