BRO
Brown & Brown, Inc.
$64.15
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 38.5% above fair value
You pay
$64.15
Bear
$24.22
Fair
$46.33
Bull
$59.60
Bear
$24.22
-62.2%
ROTCE 6.3% → 0.65x TBV
Fair
$46.33
-27.8%
ROTCE 8.4% → 1.24x TBV
Bull
$59.60
-7.1%
ROTCE 9.7% → 1.59x TBV
Adjust Assumptions
8.4%
7.6%
Key Value Driver
ROTCE (8.4%) vs. cost of equity (7.6%)
Implied Market Multiple
1.71x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (31 analysts)
$72.67
Divergence from AlphaVal
36%
Summary
With ROTCE of 8.4% vs. 7.6% cost of equity, fair P/TBV is 1.24x on $37.50 tangible book, implying $46.33 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 $72.67 (from 31 analysts). Our estimate is 36% below 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