BHLB
Berkshire Hills Bancorp, Inc.
$26.13
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 23.1% above fair value
You pay
$26.13
Bear
$14.87
Fair
$21.23
Bull
$27.61
Bear
$14.87
-43.1%
ROTCE 4.0% → 0.30x TBV
Fair
$21.23
-18.7%
ROTCE 4.6% → 0.30x TBV
Bull
$27.61
+5.7%
ROTCE 5.3% → 0.33x TBV
Key Value Driver
ROTCE (4.6%) vs. cost of equity (7.9%)
Implied Market Multiple
0.62x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $23.50 from 15 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $21.23 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.
Return on equity (4.6%) is below the minimum investors require (7.9%). This means the bank is worth less than the net assets on its books.
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