CFR
Cullen/Frost Bankers, Inc.
$154.11
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 31.8% below fair value
You pay
$154.11
Bear
$147.36
Fair
$226.08
Bull
$273.31
Bear
$147.36
-4.4%
ROTCE 10.6% → 2.00x TBV
Fair
$226.08
+46.7%
ROTCE 14.2% → 3.07x TBV
Bull
$273.31
+77.3%
ROTCE 16.3% → 3.71x TBV
Adjust Assumptions
14.2%
7.3%
Key Value Driver
ROTCE (14.2%) vs. cost of equity (7.3%)
Implied Market Multiple
2.09x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (34 analysts)
$170.11
Divergence from AlphaVal
33%
Summary
With ROTCE of 14.2% vs. 7.3% cost of equity, fair P/TBV is 3.07x on $73.58 tangible book, implying $226.08 per share. DDM cross-check: $224.55.
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 $170.11 (from 34 analysts). Our estimate is 33% 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