BRK-B
Berkshire Hathaway Inc.
$491.09
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 22.3% below fair value
You pay
$491.09
Bear
$442.55
Fair
$632.20
Bull
$821.86
Bear
$442.55
-9.9%
ROTCE 8.4% → 1.20x TBV
Fair
$632.20
+28.7%
ROTCE 11.2% → 1.97x TBV
Bull
$821.86
+67.4%
ROTCE 12.8% → 2.43x TBV
Key Value Driver
ROTCE (11.2%) vs. cost of equity (7.6%)
Implied Market Multiple
1.77x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $465.50 from 10 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $632.20 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.
Wall Street's average price target is $465.50 (from 10 analysts). Our estimate is 45% above the consensus -- consider that gap carefully.
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