BFST
Business First Bancshares, Inc.
$27.84
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 27.1% below fair value
You pay
$27.84
Bear
$23.58
Fair
$38.18
Bull
$46.95
Bear
$23.58
-15.3%
ROTCE 8.7% → 1.01x TBV
Fair
$38.18
+37.2%
ROTCE 11.5% → 1.64x TBV
Bull
$46.95
+68.6%
ROTCE 13.3% → 2.02x TBV
Key Value Driver
ROTCE (11.5%) vs. cost of equity (8.6%)
Implied Market Multiple
1.2x
Summary
With ROTCE of 11.5% vs. 8.6% cost of equity, fair P/TBV is 1.64x on $23.30 tangible book, implying $38.18 per share. DDM cross-check: $14.01.
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: $14.01 (63% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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