CHCO
City Holding Company
$140.88
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 24.1% below fair value
You pay
$140.88
Bear
$173.45
Fair
$185.54
Bull
$185.54
Bear
$173.45
+23.1%
ROTCE 15.0% → 3.74x TBV
Fair
$185.54
+31.7%
ROTCE 20.0% → 4.00x TBV
Bull
$185.54
+31.7%
ROTCE 23.0% → 4.00x TBV
Adjust Assumptions
20.0%
6.9%
Key Value Driver
ROTCE (20.0%) vs. cost of equity (6.9%)
Implied Market Multiple
3.04x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (8 analysts)
$114.50
Divergence from AlphaVal
62%
Summary
With ROTCE of 20.0% vs. 6.9% cost of equity, fair P/TBV is 4.00x on $46.39 tangible book, implying $185.54 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 $114.50 (from 8 analysts). Our estimate is 62% 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