BSRR
Sierra Bancorp
$41.74
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 16.6% below fair value
You pay
$41.74
Bear
$31.69
Fair
$50.07
Bull
$61.10
Bear
$31.69
-24.1%
ROTCE 9.4% → 1.22x TBV
Fair
$50.07
+20.0%
ROTCE 12.5% → 1.92x TBV
Bull
$61.10
+46.4%
ROTCE 14.4% → 2.35x TBV
Adjust Assumptions
12.5%
8.4%
Key Value Driver
ROTCE (12.5%) vs. cost of equity (8.4%)
Implied Market Multiple
1.6x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (9 analysts)
$39.00
Divergence from AlphaVal
28%
Summary
With ROTCE of 12.5% vs. 8.4% cost of equity, fair P/TBV is 1.92x on $26.03 tangible book, implying $50.07 per share. DDM cross-check: $19.58.
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.
Dividend-based valuation: $19.58 (61% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $39.00 (from 9 analysts). Our estimate is 28% 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