BHLB
Berkshire Hills Bancorp, Inc.
$26.13
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 47.5% above fair value
You pay
$26.13
Bear
$12.64
Fair
$17.71
Bull
$23.02
Bear
$12.64
-51.6%
ROTCE 4.0% → 0.30x TBV
Fair
$17.71
-32.2%
ROTCE 4.6% → 0.30x TBV
Bull
$23.02
-11.9%
ROTCE 5.3% → 0.33x TBV
Adjust Assumptions
4.6%
7.9%
Key Value Driver
ROTCE (4.6%) vs. cost of equity (7.9%)
Implied Market Multiple
0.62x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (15 analysts)
$23.50
Divergence from AlphaVal
25%
Summary
With ROTCE of 4.6% vs. 7.9% cost of equity, fair P/TBV is 0.30x on $42.14 tangible book, implying $17.71 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