CBSH
Commerce Bancshares, Inc.
$58.09
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 30.0% below fair value
You pay
$58.09
Bear
$55.10
Fair
$83.01
Bull
$99.65
Bear
$55.10
-5.2%
ROTCE 11.7% → 2.21x TBV
Fair
$83.01
+42.9%
ROTCE 15.6% → 3.33x TBV
Bull
$99.65
+71.5%
ROTCE 17.9% → 4.00x TBV
Adjust Assumptions
15.6%
7.5%
Key Value Driver
ROTCE (15.6%) vs. cost of equity (7.5%)
Implied Market Multiple
2.33x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (15 analysts)
$67.25
Divergence from AlphaVal
23%
Summary
With ROTCE of 15.6% vs. 7.5% cost of equity, fair P/TBV is 3.33x on $24.91 tangible book, implying $83.01 per share. DDM cross-check: $16.60.
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: $16.60 (80% below 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