BRO
Brown & Brown, Inc.
$57.82
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 3.8% above fair value
You pay
$57.82
Bear
$29.11
Fair
$55.68
Bull
$71.63
Bear
$29.11
-49.6%
ROTCE 6.3% → 0.59x TBV
Fair
$55.68
-3.7%
ROTCE 8.4% → 1.12x TBV
Bull
$71.63
+23.9%
ROTCE 9.7% → 1.45x TBV
Key Value Driver
ROTCE (8.4%) vs. cost of equity (7.9%)
Implied Market Multiple
1.56x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $88.50 from 30 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $55.68 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 $88.50 (from 30 analysts). Our estimate is 53% 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