CFR
Cullen/Frost Bankers, Inc.
$160.87
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 32.3% below fair value
You pay
$160.87
Bear
$154.81
Fair
$237.51
Bull
$287.13
Bear
$154.81
-3.8%
ROTCE 10.6% → 2.10x TBV
Fair
$237.51
+47.6%
ROTCE 14.2% → 3.23x TBV
Bull
$287.13
+78.5%
ROTCE 16.3% → 3.90x TBV
Adjust Assumptions
14.2%
7.2%
Key Value Driver
ROTCE (14.2%) vs. cost of equity (7.2%)
Implied Market Multiple
2.19x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (34 analysts)
$158.86
Divergence from AlphaVal
50%
Summary
With ROTCE of 14.2% vs. 7.2% cost of equity, fair P/TBV is 3.23x on $73.58 tangible book, implying $237.51 per share. DDM cross-check: $245.06.
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.
Wall Street's average price target is $158.86 (from 34 analysts). Our estimate is 50% 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