BHRB
Burke & Herbert Financial Services Corp.
$70.70
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 54.2% below fair value
You pay
$70.70
Bear
$140.78
Fair
$154.31
Bull
$154.31
Bear
$140.78
+99.1%
ROTCE 11.3% → 3.65x TBV
Fair
$154.31
+118.3%
ROTCE 15.1% → 4.00x TBV
Bull
$154.31
+118.3%
ROTCE 17.3% → 4.00x TBV
Adjust Assumptions
15.1%
6.0%
Key Value Driver
ROTCE (15.1%) vs. cost of equity (6.0%)
Implied Market Multiple
1.83x
Summary
With ROTCE of 15.1% vs. 6.0% cost of equity, fair P/TBV is 4.00x on $38.58 tangible book, implying $154.31 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.
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