CBSH
Commerce Bancshares, Inc.
$56.07
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 32.2% below fair value
You pay
$56.07
Bear
$54.87
Fair
$82.67
Bull
$99.35
Bear
$54.87
-2.1%
ROTCE 11.7% → 2.17x TBV
Fair
$82.67
+47.4%
ROTCE 15.6% → 3.27x TBV
Bull
$99.35
+77.2%
ROTCE 17.9% → 3.92x TBV
Adjust Assumptions
15.6%
7.6%
Key Value Driver
ROTCE (15.6%) vs. cost of equity (7.6%)
Implied Market Multiple
2.21x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (15 analysts)
$65.13
Divergence from AlphaVal
27%
Summary
With ROTCE of 15.6% vs. 7.6% cost of equity, fair P/TBV is 3.27x on $25.32 tangible book, implying $82.67 per share. DDM cross-check: $16.43.
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: $16.43 (80% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $65.13 (from 15 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