BAC
Bank of America Corporation
$61.76
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 13.5% above fair value
You pay
$61.76
Bear
$38.10
Fair
$54.43
Bull
$70.76
Bear
$38.10
-38.3%
ROTCE 9.8% → 0.85x TBV
Fair
$54.43
-11.9%
ROTCE 13.0% → 1.33x TBV
Bull
$70.76
+14.6%
ROTCE 15.0% → 1.62x TBV
Key Value Driver
ROTCE (13.0%) vs. cost of equity (10.8%)
Implied Market Multiple
1.87x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $65.82 from 54 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $54.43 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.
Dividend-based valuation: $24.51 (49% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $65.82 (from 54 analysts). Our estimate is 27% 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