BWB
Bridgewater Bancshares, Inc.
$18.72
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 30.3% below fair value
You pay
$18.72
Bear
$15.02
Fair
$26.84
Bull
$33.93
Bear
$15.02
-19.8%
ROTCE 6.9% → 0.84x TBV
Fair
$26.84
+43.4%
ROTCE 9.3% → 1.50x TBV
Bull
$33.93
+81.3%
ROTCE 10.6% → 1.90x TBV
Key Value Driver
ROTCE (9.3%) vs. cost of equity (7.5%)
Implied Market Multiple
1.05x
Summary
With ROTCE of 9.3% vs. 7.5% cost of equity, fair P/TBV is 1.50x on $17.87 tangible book, implying $26.84 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.
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