CADE
Cadence Bank
$42.11
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Mild
·
Conviction
Overvalued
Trading 1.3% above fair value
You pay
$42.11
Bear
$29.08
Fair
$41.55
Bull
$54.02
Bear
$29.08
-30.9%
ROTCE 8.9% → 0.89x TBV
Fair
$41.55
-1.3%
ROTCE 11.9% → 1.42x TBV
Bull
$54.02
+28.3%
ROTCE 13.6% → 1.74x TBV
Adjust Assumptions
11.9%
9.5%
Key Value Driver
ROTCE (11.9%) vs. cost of equity (9.5%)
Implied Market Multiple
1.71x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (20 analysts)
$39.75
Divergence from AlphaVal
5%
Summary
With ROTCE of 11.9% vs. 9.5% cost of equity, fair P/TBV is 1.42x on $24.63 tangible book, implying $41.55 per share. DDM cross-check: $65.26.
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: $65.26 (57% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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