BRK-B
Berkshire Hathaway Inc.
$515.44
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 23.5% below fair value
You pay
$515.44
Bear
$471.72
Fair
$673.88
Bull
$876.04
Bear
$471.72
-8.5%
ROTCE 8.4% → 1.21x TBV
Fair
$673.88
+30.7%
ROTCE 11.2% → 1.99x TBV
Bull
$876.04
+70.0%
ROTCE 12.8% → 2.45x TBV
Adjust Assumptions
11.2%
7.6%
Key Value Driver
ROTCE (11.2%) vs. cost of equity (7.6%)
Implied Market Multiple
1.85x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (10 analysts)
$604.00
Divergence from AlphaVal
12%
Summary
With ROTCE of 11.2% vs. 7.6% cost of equity, fair P/TBV is 1.99x on $277.95 tangible book, implying $673.88 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