BAC
Bank of America Corporation
$62.69
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 29.8% above fair value
You pay
$62.69
Bear
$33.81
Fair
$48.30
Bull
$62.79
Bear
$33.81
-46.1%
ROTCE 9.8% → 0.86x TBV
Fair
$48.30
-23.0%
ROTCE 13.0% → 1.35x TBV
Bull
$62.79
+0.2%
ROTCE 15.0% → 1.64x TBV
Adjust Assumptions
13.0%
10.7%
Key Value Driver
ROTCE (13.0%) vs. cost of equity (10.7%)
Implied Market Multiple
1.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (54 analysts)
$66.00
Divergence from AlphaVal
27%
Summary
With ROTCE of 13.0% vs. 10.7% cost of equity, fair P/TBV is 1.35x on $33.00 tangible book, implying $48.30 per share. DDM cross-check: $28.80.
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: $28.80 (40% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $66.00 (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