CFR
Cullen/Frost Bankers, Inc.
$157.90
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 24.3% below fair value
You pay
$157.90
Bear
$135.96
Fair
$208.60
Bull
$252.18
Bear
$135.96
-13.9%
ROTCE 10.6% → 2.07x TBV
Fair
$208.60
+32.1%
ROTCE 14.2% → 3.18x TBV
Bull
$252.18
+59.7%
ROTCE 16.3% → 3.85x TBV
Key Value Driver
ROTCE (14.2%) vs. cost of equity (7.2%)
Implied Market Multiple
2.17x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $154.40 from 33 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $208.60 per share.
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: $382.48 (65% above our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $154.40 (from 33 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