BHRB
Burke & Herbert Financial Services Corp.
$62.77
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 69.7% below fair value
You pay
$62.77
Bear
$189.18
Fair
$207.37
Bull
$207.37
Bear
$189.18
+201.4%
ROTCE 11.3% → 3.65x TBV
Fair
$207.37
+230.4%
ROTCE 15.1% → 4.00x TBV
Bull
$207.37
+230.4%
ROTCE 17.3% → 4.00x TBV
Key Value Driver
ROTCE (15.1%) vs. cost of equity (6.0%)
Implied Market Multiple
1.21x
Summary
With ROTCE of 15.1% vs. 6.0% cost of equity, fair P/TBV is 4.00x on $51.84 tangible book, implying $207.37 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