CSWC
Capital Southwest Corporation
$22.77
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 34.3% below fair value
You pay
$22.77
Bear
$24.25
Fair
$34.64
Bull
$45.03
Bear
$24.25
+6.5%
ROTCE 8.4% → 0.99x TBV
Fair
$34.64
+52.1%
ROTCE 11.2% → 1.62x TBV
Bull
$45.03
+97.7%
ROTCE 12.9% → 2.00x TBV
Key Value Driver
ROTCE (11.2%) vs. cost of equity (8.4%)
Implied Market Multiple
1.4x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $23.58 from 10 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $34.64 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 $23.58 (from 10 analysts). Our estimate is 59% 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