BSRR
Sierra Bancorp
$40.33
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 18.4% below fair value
You pay
$40.33
Bear
$31.29
Fair
$49.44
Bull
$60.33
Bear
$31.29
-22.4%
ROTCE 9.4% → 1.21x TBV
Fair
$49.44
+22.6%
ROTCE 12.5% → 1.92x TBV
Bull
$60.33
+49.6%
ROTCE 14.4% → 2.34x TBV
Adjust Assumptions
12.5%
8.5%
Key Value Driver
ROTCE (12.5%) vs. cost of equity (8.5%)
Implied Market Multiple
1.56x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (9 analysts)
$39.00
Divergence from AlphaVal
27%
Summary
With ROTCE of 12.5% vs. 8.5% cost of equity, fair P/TBV is 1.92x on $25.80 tangible book, implying $49.44 per share. DDM cross-check: $17.84.
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: $17.84 (64% 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 27% 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