BRO
Brown & Brown, Inc.
$73.31
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 55.3% above fair value
You pay
$73.31
Bear
$24.68
Fair
$47.20
Bull
$60.72
Bear
$24.68
-66.3%
ROTCE 6.3% → 0.66x TBV
Fair
$47.20
-35.6%
ROTCE 8.4% → 1.26x TBV
Bull
$60.72
-17.2%
ROTCE 9.7% → 1.62x TBV
Adjust Assumptions
8.4%
7.5%
Key Value Driver
ROTCE (8.4%) vs. cost of equity (7.5%)
Implied Market Multiple
1.96x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (31 analysts)
$72.50
Divergence from AlphaVal
35%
Summary
With ROTCE of 8.4% vs. 7.5% cost of equity, fair P/TBV is 1.26x on $37.50 tangible book, implying $47.20 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 $72.50 (from 31 analysts). Our estimate is 35% 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