CARE
Carter Bankshares, Inc.
$30.21
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 39.1% above fair value
You pay
$30.21
Bear
$10.11
Fair
$21.72
Bull
$28.70
Bear
$10.11
-66.5%
ROTCE 5.6% → 0.54x TBV
Fair
$21.72
-28.1%
ROTCE 7.5% → 1.15x TBV
Bull
$28.70
-5.0%
ROTCE 8.6% → 1.52x TBV
Adjust Assumptions
7.5%
7.0%
Key Value Driver
ROTCE (7.5%) vs. cost of equity (7.0%)
Implied Market Multiple
1.6x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (5 analysts)
$30.75
Divergence from AlphaVal
29%
Summary
With ROTCE of 7.5% vs. 7.0% cost of equity, fair P/TBV is 1.15x on $18.84 tangible book, implying $21.72 per share. DDM cross-check: $8.76.
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: $8.76 (60% 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 29% 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