CARE
Carter Bankshares, Inc.
$30.77
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 46.2% above fair value
You pay
$30.77
Bear
$9.79
Fair
$21.04
Bull
$27.79
Bear
$9.79
-68.2%
ROTCE 5.6% → 0.52x TBV
Fair
$21.04
-31.6%
ROTCE 7.5% → 1.12x TBV
Bull
$27.79
-9.7%
ROTCE 8.6% → 1.48x TBV
Adjust Assumptions
7.5%
7.1%
Key Value Driver
ROTCE (7.5%) vs. cost of equity (7.1%)
Implied Market Multiple
1.63x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (5 analysts)
$30.75
Divergence from AlphaVal
32%
Summary
With ROTCE of 7.5% vs. 7.1% cost of equity, fair P/TBV is 1.12x on $18.84 tangible book, implying $21.04 per share. DDM cross-check: $8.59.
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: $8.59 (59% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $30.75 (from 5 analysts). Our estimate is 32% 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