CRVL
CorVel Corporation
$76.49
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Overvalued
Trading 130.9% above fair value
You pay
$76.49
Bear
$23.18
Fair
$33.12
Bull
$43.06
Bear
$23.18
-69.7%
ROTCE 20.0% → 2.64x TBV
Fair
$33.12
-56.7%
ROTCE 25.0% → 3.47x TBV
Bull
$43.06
-43.7%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
30.9%
10.1%
Key Value Driver
ROTCE (30.9%) vs. cost of equity (10.1%)
Implied Market Multiple
10.92x
Summary
With ROTCE of 30.9% vs. 10.1% cost of equity, fair P/TBV is 3.47x on $7.00 tangible book, implying $33.12 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.
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