CHCO
City Holding Company
$124.64
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 28.3% below fair value
You pay
$124.64
Bear
$159.22
Fair
$173.81
Bull
$173.81
Bear
$159.22
+27.7%
ROTCE 15.0% → 3.66x TBV
Fair
$173.81
+39.5%
ROTCE 20.0% → 4.00x TBV
Bull
$173.81
+39.5%
ROTCE 23.0% → 4.00x TBV
Key Value Driver
ROTCE (20.0%) vs. cost of equity (7.0%)
Implied Market Multiple
2.7x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $130.00 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $173.81 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.
Wall Street's average price target is $130.00 (from 8 analysts). Our estimate is 42% 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